RNS Number : 7251K
Flowtech Fluidpower PLC
30 August 2023
 

WEDNESDAY, 30 AUGUST 2023

 

 

FLOWTECH FLUIDPOWER PLC

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

 

 

"a world of motion"

Our aim is to provide our customers with power, motion & control solutions, from a single component to integrated engineering systems, in the most cost-effective way, harnessing the best global brands & products, services and engineers in the market.

 

 

2023 HALF-YEAR REPORT

For the six months ended 30 June 2023

 

 

"Despite increasingly challenging economic conditions, overall Group revenue increased by 2.8% in the period with a more positive performance in our solutions and services segments and a weaker performance in the product distribution segment, as previously reported.  We have continued to make positive progress on working capital management, continuing to improve our debt position whilst maintaining tight cost controls. 

 

We expect these market headwinds to continue through H2 23 and into 2024 but I am pleased to report good progress is being made in deploying an immediate performance improvement plan and the refreshed strategy, strengthening the leadership team and simplifying the operating model building the capabilities to deliver mid-term scalable growth in a highly fragmented market."

 

Mike England, Chief Executive Officer

 

 

 

TRADING AND OPERATIONAL HIGHLIGHTS

 

·      Revenue increased by 2.8% with varying performance across segments

·      Sustained strong gross margin of 35.5% (H1 22 36.3%)

·      Inflationary pressures partially offset by cost savings initiatives

·      Underlying operating profit of £3.4m, a decrease of £0.9m on the comparative period

·      £4.3m decrease in net debt (pre-leases)

 

 

 

 

FINANCIAL HIGHLIGHTS

Half year ended

30 June 2023

Unaudited

Half year ended

30 June 2022

Unaudited

Year ended

31 December 2022

Audited

·      Revenue

£59.1m

£57.5m

£114.8m

·      Gross profit %

35.5%

36.3%

35.7%

·      Underlying EBITDA*

£5.0m

£5.8m

£11.6m

·      Underlying operating profit**

£3.4m

£4.3m

£8.6m

·      Operating profit / (loss)

£2.4m

£3.6m

(£4.4m)

·      Profit / (loss) before tax

£1.6m

£3.1m

(£5.6m)

·      Earnings per share (basic)

2.28p

4.24p

(10.17p)

·      Net debt***

£15.4m

£19.7m

£16.0m

 

 

*Underlying EBITDA is profit before interest, taxation, depreciation and separately disclosed items.

**Underlying operating profit is operating profit for continuing operations before separately disclosed items (note 3).

***Net debt is bank debt less cash and cash equivalents. It excludes lease liabilities under IFRS 16.

 

 

RESULTS PRESENTATION:

Today, 30 August 2023, at 10.00am (BST) CEO Mike England and CFO Russell Cash will provide a 'live' presentation via the Investor Meet Company platform (IMC) at:

 

https://www.investormeetcompany.com/flowtech-fluidpower-plc/register-investor

 

Website: www.investormeetcompany.com

 

 

FLOWTECH FLUIDPOWER PLC 2023 HALF-YEAR REPORT

For the six months ended 30 June 2023

 

 

2023 HALF-YEAR FINANCIAL PERFORMANCE AND DIVISIONAL ANALYSIS

 

 

Revenue by current segment

Six months

ended

30 June 2023

 

£000

Six months

ended

30 June 2022

(re-stated**)

£000

%

Change

 

Year

ended

31 December 2022 (re-stated**)

£000

Flowtech (Product Distribution)

26,606

28,192

-5.6%

53,273

Fluidpower Group Solutions

22,019

19,749

11.5%

40,368

Fluidpower Group Services

10,445

9,516

9.8%

21,125

Total Group revenue

59,070

57,457

2.8%

114,766

Gross profit %

35.5%

36.3%

 

35.7%

 

 

Underlying segment operating profit*

Six months

ended

30 June 2023

 

£000

Return on revenue

 

 

%

Six months

ended

30 June 2022

(re-stated)

£000

Return on revenue

 

 

%

Year

ended

31 December 2022

(re-stated)

£000

Return on revenue

 

 

%

Flowtech (Product Distribution)

2,275

8.6%

3,617

12.8%

6,206

11.7%

Fluidpower Group Solutions

2,462

11.2%

2,707

13.7%

5,086

12.6%

Fluidpower Group Services

1,202

11.5%

234

2.5%

1,804

8.5%

Central costs

(2,515)


(2,245)


(4,510)


Underlying operating profit*

3,424


4,313


8,586


 

*

Underlying operating profit is operating profit for continuing operations before separately disclosed items (note 3).

**

H1 22 and FY 22 figures have been re-stated to reflect the movement of certain revenue streams between segments, however there is no impact on Group profitability.

 

 

REVENUE

Revenue increased by 2.8% in H1 23 compared to H1 22. The growth achieved in both the Solutions (11.5%) and Services (9.8%) segments was pleasing; this served to mitigate the impact of a disappointing performance within the Product Distribution segment where revenue declined by 5.6%. The second quarter of the year provided more challenging trading conditions across each segment than the first quarter.

 

Gross profit margin

Our gross profit margin remains strong at 35.5% (H1 22 36.3%); the modest movement relates primarily to the change in sales mix due to divisional margins being lower in the Solutions and Service segment as compared to the Product Distribution segment.

 

OPERATING Costs

Underlying operating costs have increased by £1.0m (6.2%), compared to the comparative 2022 period. Approximately two thirds of our cost base relate to people costs; our average number of employees in H1 23 decreased by 5.8% compared to H1 22 but this was offset by inflation on wages and other costs alongside the impact of investment in senior personnel (building future capability and scale).

 

UNDERLYING OPERATING PROFIT

Underlying operating profit of £3.4m is a decrease of £0.9m from the comparative period (H1 22: £4.3m).  

 

The performance of the Product Distribution segment was disappointing, as explained under the "Trading Review" section below.  We are pleased with the performance in the Solutions and Services divisions which both continued to show strong growth at attractive margins.

 

NET DEBT

Net debt (pre-lease debt) was £15.4m at 30 June 2023 (H1 22: £19.7m), with headroom of £9.6m under the Group's banking facilities. Key to achieving this reduction was a £3.9m reduction in inventory levels.  We expect this trend to continue as we benefit from a less volatile supply chain environment. If leases are taken into account, the reduction in Group debt was £5.1m.

 

TRADING REVIEW

We have highly skilled and capable people, passionate about providing the highest levels of technical and engineering expertise and customer service.  In a technical industrial market, this is a source of competitive advantage.  Positive progress has been made in H1 23 building our people capabilities including increased investment in training, learning and development, investment in health, safety and wellbeing and supporting them through these more challenging economic times.  We thank our people for their continued commitment and dedication.

 

In our Product Distribution segment (which accounts for 45% of Group revenue), the performance has been disappointing for over 12 months continuing through H1 23 with revenue decline of 5.6%.  This is in part due to the more volatile economic and industrial landscape but also due to internal challenges resulting from the consolidation of five businesses into one during 2021/2022 including the closure of the Leicester Distribution Centre, consolidating inventory into the main Skelmersdale Distribution Centre.  Whilst this consolidation has enabled improved scale and efficiency, aspects of this integration have impacted some parts of the customer experience.  Interventions are in flight to address this to ensure we have quickly returned to the levels of high service expected by our customers including further improvements to our website, catalogue, commercial discipline and our service.

 

In our Solutions and Services segments, we are pleased with the performance with H1 23 revenue growth of 11%.  We have improved the focus in offering a wide range of engineering services, further building our reputation for delivering technical products, designing, manufacturing and supporting our distributors, industrial end users and original equipment manufacturers across our geographies. 

 

Our international businesses in the Island of Ireland and Benelux which contribute c.28% of Group revenue have continued to perform well.  Ireland in particular, where we have consolidated our two businesses into one has seen revenue growth in H1 23 of 19%.  Our two businesses in Benelux have made a positive contribution of 16% return on revenues and we see further opportunity here to drive greater synergy and to further increase market share gains. 

 

Group Gross Margin performance was stable, and management has remained focused ensuring we stay ahead of supplier price rises and service labour costs during a continued inflationary market.  There is though gross profit impact resulting from the revenue mix between the higher gross margin Product Distribution segment and the Solutions and Services segment.  We see further opportunity for gross margin enhancement across the Group by improving our commercial effectiveness, pricing discipline and building greater procurement capability.

 

Our cost management remains disciplined and whilst we have taken all necessary action to react to inflationary market pressures, we continue to support our highly skilled and talented workforce and build enhanced capabilities as we look to underpin our mid-term strategy to deliver scalable and sustainable growth and value creation.  However, we see significant further opportunity for delivering efficiencies across the Group as we scale through the deployment of our refreshed strategy, further simplifying the operating model, underpinned by investment in improved automation, technology and processes.

 

We have continued to focus on cash and optimising our working capital which resulted in the £5.1m reported reduction in net debt.  As we look forward, our focus will remain on achieving further working capital optimisation and improved cash efficiencies across the Group whilst seeking to improve overall stock availability and service by adopting a more rigorous approach to inventory and supplier management.

 

STRATEGY

We are pleased to report good progress in implementing an immediate Performance Improvement Plan and the refreshed strategy (our journey to the future), across the Group. 

 

i)    Performance Improvement Plan

The Performance Improvement Plan focusses on near-term performance improvement to quickly deliver a more customer centric, lean and scalable platform for growth.  It consists of three key components;

a) Simple - we are implementing a simple operating model releasing the full potential of our people and our capabilities,

b) Customer centric - moving decision making and activities to be more centred around the customer with a renewed growth focus across all channels, and

c) Scalable - Re-focusing on doing the basics brilliantly whilst improving our operational and technology infrastructure to power future growth.

 

ii)   Refreshed strategy

Our refreshed strategy (our journey to the future) sets out our ambition and has two key components;

 

a) A world of motion - We will expand on our product and engineering capabilities across the wider power, motion and control sector. In doing so, we increase our market share opportunity in Europe from c£10bn to c£30bn.  We will target two times market growth rate.  This also serves to future proof the Group with a focus on new emerging technologies.

 

b) The power of one - we will release the full potential, scalability and efficiency of the Group by transitioning to a single brand and operating model.  We will launch a simplified value proposition for our target customers. 

 

 

 

As part of the strategy, we are focused on delivering a measurable value creation plan consisting of defined strategic focus areas to deliver mid-teens underlying operating profit margin.

 

The Performance Improvement Plan and refreshed strategy is enabled by the formation of a new, diverse and highly skilled leadership team organised into a functional, country led structure where we are building greater core competence and capabilities.  Five of the previous leadership team have exited the business and the new team, consisting of a strong mix of existing and new talent, has now been appointed; a number of the new members of the team are already operating within the business with the final three leaders onboarding in October.  The accountability of this team will be to deliver the defined areas of strategic focus, known internally as growth engines.

 

The immediate priority is on short-term 'self-help' interventions to deliver improved performance throughout H2 23 and into 2024 focused on improvements in a) our growth capabilities (including our marketing, digital and sales capabilities), b) our core service and delivery capabilities (doing the basics brilliantly) and c) simplifying how we work (to deliver greater speed, agility and efficiencies).

 

OUTLOOK

We expect external economic headwinds to continue to bite through H2 23 and into 2024 with continued slowdown in industrial output and production.  We have deployed a number of focused interventions to address weaker performing areas underpinned by a change in leadership and capability and providing greater clarity on our forward strategy and plans.  Our people are motivated and committed to delivering high performance and whilst we expect H2 23 to remain challenging, we are optimistic in our outlook in building our momentum and capabilities into 2024 and beyond through the deployment of our refreshed strategy.

 

 

 

 

 

By order of the Board

29 August 2023

 

 

 

CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2023

 


Notes

Unaudited

Unaudited

Audited

Six months ended

Six months ended

Year ended

30 June

30-June

31-December

2023

2022

2022

£000

£000

£000

Continuing operations


 


 

Revenue

59.070

57,457

114,766

Cost of sales

(38,089)

(36,611)

(73,792)

Gross profit


20,981

20,846

40,974

Distribution expenses

(2,288)

(2,159)

(4,428)

Administrative expenses before separately disclosed items:


(15,269)

(14,374)

(27,960)

- separately disclosed items

3

(987)

(690)

(12,966)

Total administrative expenses

 

(16,256)

(15,064)

(40,926)

Operating profit / (loss)

 

2,437

3,623

(4,380)

Financial expenses

 

(813)

(474)

(1,192)

Profit / (loss) from continuing operations before tax

 

1,624

3,149

(5,572)

Taxation

4

(220)

(542)

(680)

Profit / (loss) from continuing operations

 

1,404

2,607

(6,252)

Earnings per share

5



 

Basic earnings per share - continuing operations


2.28p

4.24p

(10.17p)

Diluted earnings per share - continuing operations


2.28p

4.19p

(10.17p)

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2023

 


Unaudited

Unaudited

Audited

Six months ended

Six months ended

Year ended

30 June

30-June

31-December

2023

2022

2022

£000

£000

£000

Profit for the period

                1,404

2,607

(6,252)

Other comprehensive income

 



Items that will be reclassified subsequently to profit or loss

 



-Exchange differences on translating foreign operations

                   (225)

153

318

Total comprehensive income in the period

1,179

2,760

(5,934)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2023

 


Unaudited

30 June

2023

Unaudited

30 June

2022

Audited

31 December

2022


£000

£000

£000

Assets

 


 

Non-current assets

 


 

Goodwill

53,092

63,164

53,092

Other intangible assets

2,979

4,107

3,523

Right of use assets

5,921

6,805

6,091

Property, plant, and equipment

7,900

6,904

7,234

Total non-current assets

69,892

80,980

69,940

Current assets

 


 

Inventories

30,843

34,731

31,486

Trade and other receivables

25,257

24,293

24,620

Prepayments

1,130

1,129

387

Cash and cash equivalents

4,446

273

3,972

Total current assets

61,676

60,426

60,465

Liabilities

 


 

Current liabilities

Interest bearing borrowings

 

-

 

 

19,967

Lease liability

1,453

1,868

1,705

Trade and other payables

20,248

20,539

19,569

Tax Payable

1,123

1,154

1,219

Total current liabilities

22,824

23,561

42,460

Net current assets

38,852

36,865

18,005

Non-current liabilities

 


 

Interest-bearing borrowings

19.889

19,947

-

Lease liability

4,705

5,178

5,008

Provisions

339

302

317

Deferred tax liabilities

1,196

1,437

1,281

Total non-current liabilities

26,129

26,864

6,606

Net assets

82,615

90,981

81,339

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)

(124)

(141)

(124)

Merger reserve

293

293

293

Merger relief reserve

3,646

3,646

3,646

Currency translation reserve

(66)

66

159

Retained losses

(13,026)

(4,775)

(14,527)

Total equity attributable to the owners of the parent company

82,615

90,981

81,339

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2022

 

 

 

Share capital

 

£000

Share

premium

 

£000

Other reserves

 

£000

Shares owned by EBT £000

Merger reserve

 

£000

Merger relief

reserve

£000

Currency

translation

reserve

£000

Total

equity

 

£000

Six months ended

30 June 2023

Unaudited

 

Balance at 1 January 2023

30,746

60,959

187

(124)

293

3,646

159

(14,527)

81,339

Profit for the period








1,404

1,404

Other comprehensive income







(225)

-

(225)

Total comprehensive income for the year







 

(225)

 

1,404

 

1,179

Transaction with owners










Share options settled










Share-based payment charge








97

97

Balance at 30 June 2023

30,746

60,959

187

(124)

293

3,646

(66)

(13,026)

82,615

Six months ended

30 June 2022

unaudited

 

Balance at 1 January 2022

30,746

60,959

187

(276)

293

3,646

(286)

(7,267)

88,002

Profit for the period








2,607

2,607

Other comprehensive income

-

-

-

-

-

-

352

(199)

153

Total comprehensive income for the year

-

-

-

-

-

-

 

352

 

2,408

 

2,760

Transaction with owners










Share-based payment charge




135




(19)

116

Share options settled

-

-

-

-

-

-

-

103

103

Balance at 30 June 2022

30,746

60,959

187

(141)

293

3,646

66

(4,775)

90,981

Twelve months ended

31 December 2022

audited

 

Balance at 1 January 2022

30,746

60,959

187

(276)

293

3,646

(286)

(7,267)

88,002

Profit or the year

-

-

-

-

-

-

-

(6,252)

(6,252)

Other comprehensive income

-

-

-

-

-

-

318

-

318

Total comprehensive income for the year

-

-

-

-

-

-

318

(6,252)

(5,934)

Transaction with owners:

 

 

 

 

 

 

 

 

 

Shares options settled

-

-

-

152

-

-

-

(25)

127

Share-based payment charge

-

-

-

-

-

-

-

372

372

Dividends paid

-

-

-

-

-

-

-

(1,228)

(1,228)

Transfers between reserves

-

-

-

-

-

-

127

(127)

-

Total transactions with owners

-

-

-

152

-

-

127

(1,008)

(729)

Balance at 31 December 2022

30,746

60,959

187

(124)

293

3,646

159

(14,527)

81,339

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2023

 


Note

Unaudited

Unaudited

Audited

Six months ended

Six months ended

 Year ended

30 June

30 June

31 December

2023

2022

2022

£000

£000

£000


 

 



Net cash from operating activities

6

3,607

(2,505)

5,014

Cash flow from investing activities

 

 


 

Acquisition of property, plant, and equipment

(1,340)

(683)

(1,645)

Acquisition of intangible assets

-

(62)

(212)

Proceeds from sale of property, plant, and equipment

3

34

65

Net cash used in investing activities

 

(1,337)

(711)

(1,792)

Cash flows from financing activities

 

 



Repayment of lease liabilities

(880)

(830)

(1,673)

Interest on lease liabilities

(116)

(118)

(227)

Other interest

(776)

(336)

(925)

Proceeds from sale of shares held by EBT

-

155

172

Dividends paid

 

-

-

(1,228)

Net cash generated from / (used in) financing activities

 

(1,772)

(1,129)

(3,881)

Net change in cash and cash equivalents

 

498

(4,345)

(659)

Cash and cash equivalents at start of period

 

3,972

4,562

4,562

Exchange differences on cash and cash equivalents

 (24)

56

69

Cash and cash equivalents at end of period

 

 4,446

273

3,972

 

 


Short-term borrowings

Long-term borrowings

Lease liabilities

Total

£000

£000

£000

£000

At 1 January 2023

19,967

-

6,713

26,680

Cash flows

 

 



Repayment

-

-

(880)

(880)

Movement between short-term and long-term

(19,967)

19,967

-

-

Other movements

-

(78)

358

280

Non-cash

 

 



Foreign exchange

-

-

(33)

(33)

At 30 June 2023

-

19,889

6,158

26,047

 

 

 

NOTES TO THE HALF-YEAR REPORT

For the six months ended 30 June 2023

 

 

 

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 2023 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

29 August 2023.

 

The Group's financial statements for the year ended 31 December 2022 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 2023.  These are consistent with the accounting policies used in the Financial Statements for the year ended 31 December 2022.

 

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 £3.4m.

·      The Group is financed by revolving credit facilities totaling £20m (extended to February 2026) and £5m 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 2023. 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 £25m banking facility.  The Group therefore continues to adopt the going concern basis in preparing its financial statements.

 

 

3.  OPERATING SEGMENTS

The operations of the business are reviewed based on three segments - Flowtech, Fluidpower Group Solutions and Fluidpower Group Services (as explained in note 2.18 of the Annual report 2022).  These operating segments are monitored by the Group's Chief Operating Decision Maker and strategic decisions are made on the basis of adjusted segment operating results. Inter-segment revenue arises on the sale of goods between Group undertakings.

 

Segment information for the reporting periods is as follows:

 

Half year ended 30 June 2023

Flowtech

 

 

£000

Fluidpower Group Solutions

£000

Fluidpower Group Services

£000

Inter-segmental transactions

£000

Central

 Costs

 

£000

Total

continuing

operations

£000

 







Income statement - continuing operations:







Revenue from external customers

26,606

22,019

10,445

-

-

 59,070

Inter segment revenue

1,177

541

375

(2,093)


-

Total revenue

27,783

22,560

10,820

(2,093)

 

59,070

Underlying operating result*

2,275

2,462

1,202

-

(2,515)

3,424

Net financing costs

(34)

(75)

(3)

-

(701)

(813)

Underlying segment result

2,241

 2,387

1,199

-

(3,216)

2,611

Separately disclosed items (see below)

(205)

(307)

(66)


(409)

(987)

Profit before tax

2,036

2,080

1,133

-

(3,625)

1,624

Specific disclosure items







Depreciation on owned plant ,property and equipment

477

83

85

-

-

645

Depreciation on right-of-use assets

386

394

35

-

65

880

Amortisation

200

288

57

-

-

545

Reconciliation of underlying operating result to operating profit:







Underlying operating result*

2,275

2,462

1,202

-

(2,515)

3,424

Separately disclosed items (see below)

(205)

(307)

(66)

-

(409)

(987)


 

 

 

 

 

 

Operating profit/ (loss)

2,070

2,155

1,136

-

(2,924)

2,437

 

          (*) Underlying operating result is continuing operations' operating profit before separately disclosed items

 

The Directors believe that the Underlying Operating Profit provides additional useful information on underlying 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 result from continuing operations is shown below. The principal adjustments made are in respect of the separately disclosed items as detailed later in this note; the Directors consider that these should be reported separately as they do not relate to the performance of the segments.

 

Segment information for the half year ended June 2022 has been re-stated following the movement of Primary Components, excluding OEM customers, from Fluidpower Group Solutions to Flowtech, as this reflects the information reported to the Chief Operating Decision Maker. Segment information for the year ended December 2022 has also been restated to include sales from OEM customers within the Solutions segment. Some overheads costs relating to Divisional management have been re-categorised as segment operating overheads to present a more comparable segment result. The re-statement of the prior year periods does not impact Group profitability.

 

 

 

 

 

(*) Underlying operating result is continuing operations' operating profit before separately disclosed items

 

 

 

Half year ended 30 June 2022

(re-stated)

Flowtech

 

 

£000

Fluidpower Group Solutions

£000

Fluidpower Group Services

£000

Inter-segmental transactions

£000

Central

 costs

 

£000

Total

continuing

operations

£000

 







Income statement - continuing operations:







Revenue from external customers

28,192

19,749

9,516

-

-

57,457

Inter segment revenue

863

652

409

(1,924)

-

-

Total revenue

29,055

20,401

9,925

(1,924)

-

57,457

Underlying operating result*

3,617

2,707

234

-

(2,245)

4,313

Net financing costs

(72)

(31)

(8)

-

(363)

(474)

Underlying segment result

3,545

2,676

226

-

(2,608)

3,839

Separately disclosed items (see below)

(108)

(335)

(57)

-

(190)

(690)

Profit before tax

3,437

2,340

169

-

(2,798)

3,149

Specific disclosure items







Depreciation on owned plant ,property and equipment

509

77

85

-

-

671

Depreciation on right-of-use assets

355

322

72

-

99

848

Amortisation

108

307

57

-

-

472

Reconciliation of underlying operating result to operating profit:

 

 

 

 

 

 

Underlying operating result*

3,617

2,707

234

-

(2,245)

4,313

Separately disclosed items (see below)

(108)

(335)

(57)

-

(190)

(690)

Operating profit/ (loss)

3,509

2,372

177

-

(2,435)

3,623

Reconciliation of re-stated segment information for the half year ended 30 June 2022 to prior year report

Flowtech

 

 

£000

Fluidpower Group Solutions

£000

Fluidpower Group Services

£000

Inter-segmental transactions

£000

Central

 costs

 

£000

Total

continuing

operations

£000

 







Revenue as per prior year report

27,614

21,842

9,925

(1,924)


57,457

Revenue from Primary components non-OEM customers categorised to Flowtech Segment

1,441

(1,441)

-

-

-

-








Total re-stated revenue

29,055

20,401

9,925

(1,924)

-

57,457

 







Underlying operating results in prior year report

3,725

2,952

328

-

(2,692)

4,313

 







Underlying operating result for Primary Components categorised to Flowtech Segment

10

(10)

-

-

-

-








Re-allocation of costs between segments

(118)

(235)

(94)

-

447

-








Underlying operating results, re-stated

3,617

2,707

234

-

(2,245)

4,313

 

 

 

For the year ended 31 December 2022

(re-stated)

Flowtech

 

 

£000

Fluidpower Group Solutions

£000

Fluidpower Group Services

£000

Inter-segmental transactions

£000

Central

 costs

 

£000

Total

continuing

operations

£000

 







Income statement - continuing operations:







Revenue from external customers

53,273

40,368

21,125

-

-

114,766

Inter segment revenue

1,706

1,008

868

(3,582)


-

Total revenue

54,979

41,376

21,993

(3,582)

 

114,766

Underlying operating result*

6,206

5,086

1,804

-

(4,510)

8,586

Net financing costs

(141)

(68)

(5)

-

(978)

(1,192)

Underlying segment result

6,065

5,018

1,799

-

(5,488)

7,394

Separately disclosed items (see below)

(8,240)

(785)

(3,329)

-

(612)

(12,966)

Profit / (loss) before tax

(2,175)

4,233

(1,530)

-

(6,100)

(5,572)

Specific disclosure items







Depreciation and impairment on owned plant, property and equipment

 

867

 

157

 

179

 

-

 

2

 

1,205

Depreciation on right-of-use assets

707

695

73

-

195

1,670

Impairment of goodwill

7,105

-

2,967

-

-

10,072

Impairment of acquired intangibles

-

-

168

-

-

168

Amortisation

230

683

124

-

-

1,037

Reconciliation of underlying operating result to operating profit:

 

 

 

 

 

 

Underlying operating result*

6,206

5,086

1,804

-

(4,510)

8,586

Separately disclosed items (see below)

(8,240)

(785)

(3,329)

-

(612)

(12,966)

Operating profit/ (loss)

(2,034)

4,301

(1,525)

-

(5,122)

(4,380)

(*) Underlying operating result is continuing operations' operating profit before separately disclosed items

 

 

 

Reconciliation of re-stated segment information for the year ended 31 December 2022 to prior year report

Flowtech

 

 

£000

Fluidpower Group Solutions

£000

Fluidpower Group Services

£000

Inter-segmental transactions

£000

Central

 costs

 

£000

Total

continuing

operations

£000

 







Revenue as per prior year report

57,271

39,084

21,993

(3,582)

-

114,766

Revenue from former Primary components OEM customers categorised from the Flowtech Segment

(2,292)

2,292

-

-

-

-








Total re-stated revenue

54,979

41,376

21,993

(3,582)

-

114,766

 







Underlying operating results in prior year report

6,887

4,405

1,804

-

(4,510)

8,586

 







Underlying operating result from Primary Components OEM customers categorised from the Flowtech Segment

(681)

681

-

-

-

-








Underlying operating results, re-stated

6,206

5,086

1,804

-

(4,510)

8,586

 

 

 

Six months ended

30 June

2023

£000

Six months ended

30 June

2022

£000

Year ended

31 December

2022

£000

Separately disclosed items within administrative expenses:




Acquisition costs

8

3

10





Amortisation of acquired intangibles

452

472

943

Impairment of acquired intangibles

-

-

168

Impairment of goodwill

-

-

10,072

Share-based payment costs

97

103

372

Restructuring costs

430

112

1,401

Total

987

690

12,966

 

·  Acquisition costs relate to outline research into potential acquisition opportunities which are presented to us

·  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

 

 

4.  TAXATION


Six months ended

30 June

2023

£000

Six months ended

30 June

2023

£000

Year ended

31 December

2022

£000

Current tax on income for the period - continuing operations:

 


 

UK tax

61

511

734

Overseas tax

265

211

185

Adjustments in respect of prior periods/ other differences

-

(89)

9

Deferred tax charge

(106)

(91)

(248)

Total taxation

220

542

680

 

The taxation for the period has been calculated by applying the estimated tax rate for the financial year ending 31 December 2023.

 

 

5.  EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings 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 2023

30 June 2022

31 December 2022

 

Earnings

Weighted average number of shares

Earnings per share

Earnings

Weighted average number of shares

Earnings per share

Earnings

Weighted average number of shares

Earnings per share

£000

000's

Pence

£000

000's

Pence

£000

000's

Pence

Basic earnings per share

 

 

 







Continuing operations

1,404

61,493

2.28

2,607

61,493

4.24

(6,252)

61,493

(10.17)


 

 

 







Diluted earnings per share

 

 

 







Continuing operations

1,404

61,673

2.28

2,607

62,236

4.19

(6,252)

61,770

(10.17)

 


Six months ended

30 June

2023

£000

Six months ended

30 June

2022

£000

Year ended

31 December 2022

£000

Weighted average number of ordinary shares for basic and diluted earnings per share

61,493

61,493

61,493

Impact of share options

180

743

277

Weighted average number of ordinary shares for diluted earnings per share

61,673

62,236

61,770

 

 

6.  NET CASH FROM OPERATING ACTIVITIES


Six months ended

30 June

2023

£000

Six months ended

30 June

2022

£000

Year ended

31 December 2022

£000

Reconciliation of profit before taxation to net cash flows from operations:

 


 

Profit / (loss) from continuing operations before tax

1,624

3,149

(5,572)

Depreciation and impairment on property, plant, and equipment

 645

671

1,205

Depreciation on right-of-use assets (IFRS 16)

 880

848

1,670

Impairment of right-of-use assets (IFRS16)

-

-

388

Release of lease liability (IFRS16)

(387)

-

-

Finance costs

890

474

1,192

(Gain) / Loss on sale of plant and equipment

2

(24)

57

Loan arrangement fee charged to income statement

(77)

-

-

Amortisation of intangible assets

545

472

1,037

Impairment of intangible assets

-

-

168

Impairment of goodwill

-

-

10,072

Settled share options

-

(40)

(42)

Equity settled share-based payment charge

97

103

372

Exchange differences on non-cash balances

(56)

-

65

Operating cash inflow before changes in working capital and provisions

4,163

5,653

10,612

Change in trade and other receivables

(1,664)

(3,316)

(2,945)

Change in stocks

601

(4,099)

(738)

Change in trade and other payables

 804

(642)

(1,702)

Change in provisions

24

(7)

7

Cash generated from operations

3,928

(2,411)

5,234

Tax paid / (reclaimed)

(321)

(94)

(220)

Net cash generated / (used) from operating activities

3,607

(2,505)

5,014

 

 

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 2022 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.

 

 

 

 

ENQUIRIES:

 

Flowtech Fluidpower plc

Mike England, Chief Executive Officer

Russell Cash, Chief Financial Officer

Tel: +44 (0) 1695 52759

 

Registered Office:

Bollin House, Bollin Walk,

Wilmslow, Cheshire, SK9 1DP

email: info@flowtechfluidpower.com

website: www.flowtechfluidpower.com

 

Liberum Capital Limited (Nominated adviser and Sole Broker)

Richard Lindley / Ben Cryer / Will King

Tel: 44 (0) 20 3100 2000

 

 

 

TooleyStreet Communications (IR and media relations)

Fiona Tooley

Tel: +44 (0) 7785 703523 or email: fiona@tooleystreet.com

 

 

 

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