NEWS RELEASE 

Issued on behalf of Flowtech Fluidpower plc

Wednesday, 9 April 2025

FLOWTECH FLUIDPOWER PLC
("Flowtech", the "Group" or "the Company")

"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."

AIM listed Flowtech Fluidpower plc (LSE symbol: FLO), today releases preliminary results for the year ended 31 December 2024 and extracts from the 2024 annual report and financial statements, which will be published in full shortly.

Key Information

Financial Highlights:

In Year Highlights:

Gross and Operating Margin Growth Levers

Sales Growth Levers

Post Period End Highlights

We are pleased to report the acquisition in March 2025 of the business and assets of Allswage, a specialist in the supply, repair and servicing of static and mobile hydraulic swaging equipment and assets.  The business and assets were acquired for initial consideration of £50,000 from the company's liquidator; assets acquired included inventory with a book value of £400,000 as well as all equipment associated with the business. Similar to the Thorite transaction this will likely result in negative goodwill given the bargain nature of the purchase.

Current Trading and Outlook

Roger McDowell, Non-Executive Chair said:

"2024 was a year of execution against our stated strategic objectives and transformation plan in order to grow our addressable market and underpin future profitable growth. We have focused on protecting the business against a challenging market backdrop and believe the business is now more robust. During the period I believe we have made solid progress on the path towards transforming the company, including in the delivery of our Strategy and Performance Improvement Plan (PIP), building the stable and scalable platform needed to support future growth.  

"Although key operational and strategic milestones have been reached in our PIP, I am disappointed with the financial outcome, with like for like revenue declining by 8.6% as customers reduced volumes, destocked, and delayed project timelines in response to a volatile macroeconomic backdrop. Whilst we outperformed the overall market trend, our decline in sales reflects the tough trading conditions present in our end markets. However, our improved gross margin to 38.2% in conjunction with our strengthened sales pipeline and order book as a result of a number of new and exciting orders secured for execution in 2025 is a positive lead indicator of the team's commitment and execution in 2024.

"After careful consideration the Board conclude that shareholder best interests would be served by passing on the final dividend and retaining cash for investment.

"As we look ahead to 2025, we will continue to adapt and remain agile in order to protect against our expectation of a continuation of the market conditions experienced in 2024. We will focus on the drivers of performance that are within our control, to unlock the power of our business across the six defined EBITDA growth engines.

Mike England, CEO added:

"We have made strong progress to implement our strategic plan with further operational improvements delivering enhancements to gross margins, working capital optimisation, service levels, and operational efficiencies. Group rebranding and restructuring are complete, and the successful integration and financial contribution of Thorite is well ahead of our expectations. With much of the business transformation concluded we have a firm, stable and scalable platform from which to deliver profitable growth into 2025 and beyond.  

"We are well on track with the development of our new digital platform to be launched to market in H1'25 and there is confidence that the broader strategy and actions taken to grow our addressable market and improve operational efficiency within the business will drive strong returns and improved shareholder value.

Chair's statement

Our year

2024 was a year of execution against our stated strategic objectives and transformation plan in order to grow our addressable market and underpin future profitable growth. We have focused on protecting the business against a challenging market backdrop and believe the business is now more robust. During the period I believe we have made solid progress on the path towards transforming the company, including in the delivery of our Strategy and Performance Improvement Plan (PIP), building the stable and scalable platform needed to support future growth.

I am pleased with the strategic progress being made by a highly energised, determined and galvanised new team under the leadership of Mike England in his first full year at the helm.

2024 was certainly not an easy year in terms of the external markets we serve. The well-documented market headwinds persisted throughout the year with the British Fluid Power Association (BFPA) consistently citing market decline of above 10% in the UK in Hydraulics and Pneumatics and macro indicators continuing to weaken particularly in the second half of the year as consumer and industry confidence fell.

Although key operational and strategic milestones have been reached in our PIP, I am disappointed with the financial outcome, with like for like revenue declining by 8.6% as customers reduced volumes, destocked, and delayed project timelines in response to a volatile macroeconomic backdrop. Whilst we outperformed the overall market trend, our decline in sales of 8.6% reflects the tough trading conditions present in our end markets. However, our improved gross margin to 38.2% in conjunction with our strengthened sales pipeline and order book, as a result of a number of new and exciting orders secured for execution in 2025 is a positive lead indicator of the team's commitment and execution in 2024.

The Board has been particularly encouraged by the Thorite acquisition which, whilst only taking place in August 2024, is demonstrating strong performance and success in terms of integration and strengthening our pneumatics, automation, vacuum and compressed air offer; a key strategic aim. In the first 18-week period of ownership to the year end the business generated an underlying operating profit of £0.1m, ahead of our initial expectations. The deal structure was such that the immediate cash outlay of £0.35m was more than repaid by the approximate £0.4m upside relating to the recovery of book debts. In addition, after settlement payments totalling approximately £0.7m we secured title to inventory which we have fair valued at £2.1m. Overall negative goodwill associated with the transaction was £2.2m as a result of acquiring assets at less than fair/market value, accounted for as a separately disclosed credit. Thorite performance has exceeded expectations providing confidence in the stability and growth of this channel into 2025.  Including the Thorite contribution, 2024 full year revenues declined by only 4.3%.

With lower-than-expected revenues driven by the persistent market headwinds, we are reporting underlying EBITDA at £5.9m. This excludes the profit arising from negative goodwill of £2.2m in relation to the Thorite acquisition. Separately disclosed items total £27.9m; this includes £25.6m in respect of impairment of goodwill, intangible assets and fixed assets. The impairment calculation is based on assumptions for several years into the future and is extremely sensitive to assumptions on revenue growth and the discount factor applied to adjust future cash flows to net present value.  Recent announcements relating to trade tariffs were non-adjusting post balance sheet events: as such any associated impact (which we do not deem to be material) has not been taken into account in the cash flow forecast used for impairment testing.

Net debt** increased by £0.4m to £15.1m at year end (2023: £14.7m) with the increase mitigated by cost reductions and strong working capital management, most notably an underlying £3m inventory reduction. As a board, we remain very focused on the management of working capital and cash generation.  We are comfortable with the current debt profile of the business, which provides ample liquidity and remains within our stated bank covenants.

The Board has reviewed the Group's capital allocation priorities which remain focused principally on supporting the implementation of our strategic plan with appropriate investment into the business to drive future profitable growth.  Furthermore, the Board believes the market could offer attractive opportunities for further bolt-on acquisitions at distressed prices.  Accordingly, the Board has given careful consideration to the payment of a dividend in respect of the year ended 31 December 2024 and has concluded that saving the cash that would be otherwise paid as a dividend is in the best interests of the Company, reducing leverage and retaining capital allocation flexibility.  In 2024 the dividend payment in respect of the year ended 31 December 2023 was approximately £1.4m.

Trading in the first quarter of 2025 has started positively and in line with our expectations. Notwithstanding the continued depressed market conditions and global uncertainty, we now have an enhanced platform in place from which to grow, take market share and meaningfully improve the Company's financial results in the coming year and into the future.

Building a scalable platform for profitable growth

2024 was an important year of transition and execution for Flowtech and whilst we are disappointed with the decline in revenue, our performance was ahead of the external market trends, implying share gains which is supportive of our move into pneumatics. As such, the Board is pleased with the progress made in delivering the necessary restructuring and underlying performance improvement interventions.  

Delivering change is not easy and I have been impressed with the determination and resilience of the new leadership team in remaining tightly focused on our end customers and delivering strong business performance, all the while undertaking the step changes needed to enable the solid structural and commercial foundations for scalable growth.  

This focus has concentrated on three key areas:  

Simple - In the year, we fully completed the restructuring to a leaner and more scalable operating model, rebranding under One Flowtech and re-aligning the organisation around our newly launched single value proposition, powering up our leadership, commercial and operational capabilities.  

Customer First - Implementing important initiatives focused on improving the customer experience, including enhancements to the current website, the launch of the new catalogue and steps taken to address key customer issues further reducing customer complaints.  

Scalable - Focused on delivering efficiency and service improvements across the product distribution network and within the manufacturing and service locations, introducing standardised and consistent work methods resulting in productivity gains and scalability.    

The Board is pleased with the steps taken in delivering on our three pillar Strategic Plan: Customer First, The Power of One and A World of Motion.  Highlights in the year include:  

Our commitment to a safer and more sustainable world 

Our refreshed purpose-led culture and strategy underpins our unchanging ESG commitment, and I am again pleased to report that we have continued to build on the good progress already made.  Our updated ESG strategy is now ready, and we will be implementing this during 2025.

​

In terms of progress, over the past year we have:  

​

Our investors 

Mike and Russ have continued with their mission to reinvigorate our focus to increase our investor facing activity. I have been encouraged during 2024 with a number of interactive investor visits to Flowtech locations, enabling first-hand demonstration of the progress and improvements being made.  This has given us the opportunity to demonstrate the progress of the Performance Improvement Plan and our refreshed and refocused strategy. We are committed to maintaining an active and open dialogue with our investors and we thank our investors for their continued support.  

We are also pleased to welcome Singer Capital Markets as Flowtech's Joint Broker; they came on board in September 2024 and have issued an initiation note to the market in January 2025. Panmure Liberum remain as the Company's Nominated Adviser and Joint Broker.

Our people and the Board  

The team have worked tirelessly to improve the operational performance of the business, driving improved gross margins through commercial pricing and cost control, delivering enhanced service levels and on-time deliveries, further strengthening the senior leadership team and optimising all aspects of the business.    

I remain very encouraged by the determination and resilience of our new leadership and the energy demonstrated by our people during a period of rapid change and very difficult external markets.  We have made significant progress towards the delivery of our strategy and improvement plan despite these challenges and I would thank everyone for their invaluable contribution.   

I am also pleased with the progress made in developing our Board with varied and relevant experience, combined with a positive but challenging approach to strive for the high performance expected by our customers.  Mike England and his other senior leadership hires are now well established in the business, and it is encouraging to see the new depth of relevant industry and leadership knowledge and experience in action during 2024 as we have set the business up in the right way for scalable growth.   

I would like to sincerely thank the Board members for their continued commitment and positive contributions.  

Looking ahead 

With the rebranding and restructuring now complete, and the new website launch expected in H1 2025, we expect the improvements made across 2024 to bear fruit in future years. We believe we have a strong, stable, and scalable platform to deliver profitable growth into 2025 and beyond.  

As we look ahead to 2025, we do expect that challenging external market conditions will persist, but we remain cautiously optimistic that the Group is well placed to outperform the wider industry.  We have completed the vast majority of the Performance Improvement Plan and business transformation, and the Leadership Team are now focused on delivering enhanced customer service, efficiency and market share growth.  We remain confident in our strategy which serves to unlock the full potential of the Group across the six defined EBITDA growth engines:  

We are well positioned to capitalise on the opportunities available to us after the strategic and operational delivery achieved in 2024. Looking forward, with a broader addressable market and customer base and the new digital platform being launched, there are a number of key components to driving improved momentum in 2025, and I am confident we have the right team in place with an unwavering determination to now build on a solid foundation for sustained growth and value creation in the years to come.

CEO review  

"Controlling the controllables in a difficult market whilst building the solid, stable and scalable platform needed for profitable growth". 

Reflections of the year  

We entered 2024 anticipating a market recovery, however, trading conditions remained difficult throughout the year. As a newly formed leadership team, we had a steely determination to quickly implement and deliver the lion's share of the Performance Improvement Plan in 2024 to deliver a solid, stable and scalable platform for profitable growth into 2025 and beyond.  I am pleased to report that much of the heavy lifting has now been done.

Controlling the controllables 

Our optimism of any market recovery was short lived as market headwinds persisted through the first half of the year and continued to deteriorate further in the second half across all of our three geographical regions - UK, Ireland and Benelux.  This was reflected in the Purchasing Managers' Index (PMI) and British Fluid Power Association reports citing a more than 10% market decline.   

We have taken a mindset of 'controlling the controllables' - taking necessary actions to deliver further gross margin improvements, tight control and a reduction in costs and making interventions to optimise and reduce working capital throughout the year.  We pivoted to higher growth customer segments ensuring continued market share gains, resulting in a strengthening of our sales pipeline and forward order book. As we look into 2025, we note some exciting projects that are due to complete.  Across product distribution, we maintained consistent customer order frequency but saw a notable reduction in order value, a common trend across the industry as volumes reduced.  There was a slowdown particularly in construction and Original Equipment Manufacturers across all three of our regions in the UK, Ireland and Benelux, with many projects being stopped or delayed as destocking and/or cost control measures took hold.  

Holding firm to the plan 

Despite these challenging end markets, we've completed the restructuring to the new, simplified operating model, strengthening the leadership and organisational effectiveness with a concentration on firing up our growth engines.  The rebranding to 'One Flowtech' was successfully completed across all three regions with a clear purpose, vision, and values being introduced to galvanise our people and capabilities together.  This was in parallel to the development and launch of our new, single value proposition combining the extensive Product Distribution and Engineering capabilities across the Group to bring greater value to our customers, from the supply of a single component up the value curve to designing, building and installing complex engineering solutions.

We were proud to welcome Thorite to the Flowtech Group in August 2024. Thorite is a strong and trusted UK brand with over 170 years of heritage. The acquisition brings a wealth of expertise, knowledge, product and service capability across Pneumatics, Vacuum and Compressed Air to support the expansion of our end user customer base and takes us further into the world of motion.  Pleasingly, Thorite exceeded expectations in Q4, and we have a highly motivated and re-energised team focused on delivering growth.

Taking on board customer feedback, we've focused on making some important improvements to the existing website experience during the year which has led to increased traffic and conversion rates. In parallel, we are well on track with the development of our new digital platform to be launched to the market in H125, which will replace our legacy platforms, enable a step change in speed and customer experience including a range of new data management and marketing tools to improve new and existing customer interactions.

Our people 

Above all, it's our people that have made the difference in what has been a challenging year both in managing through a difficult external market and delivering the important step change across the Group to deliver on our strategy and improvement plan.  We thank our people sincerely; they have embraced our vision for a brighter future and gone above and beyond for our customers.

There is growing confidence that the broader growth strategy and actions taken to improve operational efficiency within the business will drive strong returns and improved shareholder value, further aided when the market recovers.  

Reviewing 2024  

Like for like revenues declined by 8.6% in the year as the rate of market related decline across all three regions has offset our positive achievements in winning new customers, retaining and strengthening our existing customer base and delivering improved gross margins.  

This revenue decline has been multi-faceted with the larger impact being reduced volumes from Original Equipment Manufacturers, as they have continued to de-stock and larger engineering projects have been suspended or delayed. This was more prevalent in the second half of the year with Ireland in particular being impacted by the Aggregates & Construction sector (in particular the OEM Crushing & Screening market) which saw more than 20% reduction in volume. 

Underlying EBITDA for the year ended 31 December 2024 was £5.9m.  We have also achieved a profit recognition of negative goodwill of £2.2m, which is separately disclosed.    We incurred an impairment charge of £25.6m, the detail of which is covered in the CFO statement.

As a team, we've remained very focused on the management of working capital and cash generation and are comfortable with the current debt profile of the business, albeit this remains an area of focus.

Leadership focus has remained firm on executing strongly across all areas of our Performance Improvement Plan, designed to fix many of the core basics required to improve customer service and performance. The business is now a more customer-centric, lean and scalable platform for growth. 

This is broadly structured under three headings where progress updates in the year have been summarised.  

A new, simplified operating model 

To unlock the full potential of our people and capabilities across the Group. 

We have successfully rebranded under ONE Flowtech, embedding a new single integrated organisational model, across the three regions, aligned to our new value proposition and corresponding go-to-market approach.  In doing so, this has strengthened commercial, operational and functional leadership and human capital capabilities, creating new departments and roles including changing 60% of the top 60 leaders in role during the year. 

Customer-centric 

Winning back customer confidence, powering up our growth capabilities to increase the quality and frequency of customer interactions underpinned by improved customer service. 

Taking on board customer feedback throughout 2023, we were pleased to launch the new Flowtech Catalogue, something that many of our customers value, in April 2024, with 53,000 catalogues deployed across our trusted Partners.  The new catalogue has been received very positively, restoring Flowtech as the leader in the market, with this vital industry publication. 

Over the year, we were pleased with the progress made by our sales teams, taking our new value proposition to market and building the sales pipeline, increasing the value of opportunities by over 50% and securing a number of new contracts for 2025 delivery.  As a result, the Group orderbook at the end of 2024 was at the highest level to date.

With improvements made to our on-time-in-full service, existing website and a continued focus on the speed of response to customer enquiries, we are pleased to report that customer satisfaction measures have continued to improve.  This is a testament to the focus of the teams which has continued to win back customer confidence and renewed enquiries.

Getting back to doing the basics, brilliantly

Delivering operational and service excellence. 

We have implemented material changes to improve the operational service and pricing mechanics across the business, recovering a lack of commercial and operational attention and regaining customer confidence which had been significantly eroded over the past years.  This being a key factor in the gross margin, service and efficiency gains made. 

Gross margin has improved by 142bps in the year through our commercial focus and discipline.  The careful management of operating overheads throughout the year and restructuring work now completed has delivered a net £1.5m annualised cost reduction into 2025.  In addition, our newly formed Group Procurement Team has delivered over £1m of indirect and direct procurement savings through enhanced capabilities and rationalisation across the Group. 

Continued focus on working capital management and service excellence enabled a reduction in inventory of £4m whilst sustaining >97% availability on our fastest moving lines. 

Executing well on our strategy 

We have defined a strategic framework consisting of three pillars and six defined EBITDA growth engines.  2024 has been an important year, with strong progress in all three areas.   

Our commitment to ESG - helping to build a safer and more sustainable world 

We have continued to increase our focus on ESG within three key areas. In parallel, we have completed a detailed analysis of our ESG activities, and I'm pleased with the progress we made towards renewing our strategy, which will launch in 2025.

In summary 

We are satisfied with the progress we have made implementing our strategic plan, whilst recognising that this has been a difficult year due to challenging end markets. With further operational improvements delivering enhancements to gross margins, working capital optimisation, service levels, and operational efficiencies, we are confident that we are controlling the controllables. The group rebranding and restructuring is now complete, and the successful integration of Thorite is well ahead of our expectations. With much of the business transformation concluded we now have a firm, stable and scalable platform from which to deliver profitable growth into 2025 and beyond.   

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We recognise the likelihood of continuing challenging markets, and we are not relying on a market recovery to drive our progress. Our mantra is to make our own success, and we head into 2025 with cautious optimism. The pipeline and order book are materially stronger entering 2025 than at any point in the past. We equally have a close eye on gross margin optimisation and generating accretive EBITDA. Actions to deliver £1.5m annual net cost savings during 2024 and return Thorite to positive profitability are key enablers to this, with any market recovery seen as upside in our view. We are well positioned, despite the persistent market headwinds and remain steadfast, determined and confident in our strategy.

CFO Review 

We have taken actions to manage our cost base and continue to focus on managing working capital and capital expenditure. We believe the business is very well placed to capitalise on more favourable market conditions and we have built our teams, and infrastructure over the last year, allowing us to pursue a number of exciting growth opportunities.   

The Group trading performance at a glance: 

(*) Underlying operating profit is used as an alternative performance measure to assess the trading performance of the business and is operating profit before separately disclosed items which are amortisation and impairment of acquired intangibles, impairment of goodwill, negative goodwill, impairment of right of use assets, share based payments, and restructuring costs. The £3.2m differential between underlying operating profit and underlying EBITDA relates to £3.2m in respect of depreciation charges.  

Our geographical segments at a glance:

Revenue 

Thorite contributed £4.8m revenue from the acquisition date (23 August 2024). As such, on a like for like basis revenue reduced by £9.6m (8.6%). 

 Gross profit 

The 142bps improvement in our gross profit margin is pleasing and builds on progress made in recent years. This has resulted in a similar value of gross profit notwithstanding a £4.8m reduction in revenue. Control of gross margin across all areas of our business is fundamental. 

Segment operating overheads 

Underlying segment operating overheads increased by £2.4m, £1.4m of which relates to Thorite. The underling increase of £1.0m (3%) primarily relates to payroll costs where a combination of pay increases and the investment in typically higher paid new personnel has more than offset the impact of a modest reduction in underlying headcount.

Central costs 

A summary of central costs is provided below: 

Management costs include the employment costs of the Executive Officers and Group Leadership Team members excluding those that have specific segment responsibilities.  

Accounting and finance cover the salary costs of the central finance and internal audit function. PLC costs capture the salaries of Non-Executive Directors and professional fees associated with our PLC status. Other areas of cost primarily relate to our project management and central health and safety teams.

The increase in Project & IT costs links to our strategic decision to build out in-house capability and resource as we focus on this area of our business which we anticipate will form a critical component of our future success.  

Separately disclosed items 

Impairment of goodwill and right of use assets 

The calculations which underpin the annual evaluation of the carrying value of assets is based on a number of key assumptions, notably revenue growth rates and the discount rate applied to reflect the net present value of future cash flows.

In total a non-cash impairment charge of £25,620,000 has been recognised in 2024, of which £25,070,000 was against Goodwill, £246,000 against fixed assets, £284,000 against intangible assets and £20,000 against right of use assets.  The split of impairment charge by geographical segment is shown below: 

Restructuring costs 

The key components of restructuring costs are c£1.7m in respect of salary costs of personnel who left the business. The balance of the charges relate to costs associated with a broad range of restructuring projects.

Net Debt 

Our Net Debt position (excluding lease liabilities) increased modestly from £14.7m to £15.1m; for clarity £15.1m is the net of our £16.9m revolving credit facility (RCF) and the £1.8m cash at bank we held at year end. If IFRS16 lease liabilities are included the position is £20.5m at 2024 year-end compared with £20.2m at 2023 year-end.

Net cash generated from operating activities totalled £8.7m (2023: £8.2m); this is the aggregation of operating cash inflow before working capital movements of £3.1m (2023:£7.5m), favourable working capital movements (excluding Thorite) totalling £5.2m (2023: £1.8m) and tax paid of £0.8m (2023: £1.1m). After net cash outflows after Thorite contribution of £5.8m (2023: £2.1m) associated with investing activities, £3.2m (2023: £3.6m) relating to financing activities and the dividend payment of £1.4m (2023: £1.3m) led to a £0.4m increase (2023: £1.3m reduction) in Bank debt.

This is summarised in the graph below:

(*) Opening and closing figures exclude IFRS 16 related liabilities. IFRS16 debt reduced by £0.1m in 2024.

Thorite Acquisition 

On 23 August 2024 we acquired the business and assets of Thomas Wright/Thorite Group Ltd ("Thorite") immediately following the appointment of its Administrator.  Thorite was established in 1850 and has a fantastic reputation within the Fluidpower sector. Its activities complement the existing activities of the Group and cross selling opportunities exist in various directions.

The consideration paid was £764k, which included initial cash consideration of £350k plus an additional £414k which was repaid to the administrators against recovered debtors. This saw assets acquired with values materially in excess of this - the disclosure in note 24 of our full annual report shows fair value of assets acquired exceeding sums paid by approx. £2.2m. Highlights within this include:

Shortly after the acquisition, steps were taken to reduce the cost base of the business - within two months we had taken approximately £1m on an annualised basis out of the business. This, combined with significant improvements in the gross profit percentage being achieved, led to a position where we got the business back into profit within the first few months of ownership and where we expect it to make a material contribution to the profit in 2025 and beyond.

Banking facilities  

Our £20m revolving credit facility provided by Barclays Bank was extended to May 2027. Covenant terms under the new agreement are consistent with before, and the base charge for the credit facilities are Sterling Overnight Index Average (SONIA)+2.40% and are subject to a non-utilisation fee of 0.84%.   

The Group also has a £5m overdraft facility which was reviewed in February 2025 and on-going support was approved.  

Summary

Profitability was materially impacted by challenging market conditions throughout 2024; we had expected conditions to ease in the second half of the year but that did not prove to be the case. We have taken actions to manage our cost base and continue to manage all aspects of working capital and capital expenditure closely. We believe the business is very well placed to capitalise on more favourable market conditions. We have built our teams, and infrastructure, and have a number of exciting growth opportunities which are currently being pursued.

We look forward to the remainder of 2025 and beyond, buoyed by the range of profit improvement initiatives which are available to us.   

Consolidated Income Statement 

For the year ended 31 December

Consolidated Statement of Comprehensive Income 

Consolidated Statement of Financial Position 

Consolidated Statement of Changes in Equity 

Consolidated Statement of Cash Flows

Reconciliation of liabilities arising from financing activities 

The changes in the Group's liabilities arising from financing activities can be classified as follows: 

Other lease movements are adjustments for the reduction in value of the lease liabilities following either the exercise of an early termination clause or an agreement with the landlord.  

Notes to the Consolidated Financial Information 

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: info@flowtechfluidpower.com. 

2. Accounting policies 

2.1 Basis of preparation 

The consolidated financial statements of the Group have been prepared in accordance with UK adopted international accounting standards and the Companies Act 2006. The Company financial statements have been prepared in accordance with Financial Reporting Standard 101 'Reduced disclosure framework' (FRS 101). 

The consolidated financial statements have been prepared on a going concern basis and prepared on the historical cost basis. 

The consolidated financial statements are presented in sterling and have been rounded to the nearest thousand (£'000). The functional currency of the Company is sterling. 

The preparation of financial information in conformity with UK-adopted international accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates. 

3. Segment reporting 

During 2024, Management reviews the operations of the business based on three geographical segments - Great Britain, Ireland and Benelux. 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.  

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 reporting periods are as follows: 

(*) Underlying operating result is continuing operations' operating profit before separately disclosed items detailed later in this note. 

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

Share-based payment costs relate to charges made in accordance with IFRS 2 'Share-based payment' following the issue of share options to employees. 

Restructuring costs relate to restructuring activities of an operational nature following acquisition of business units and other restructuring activities in established businesses. In 2024 restructuring costs included £377k relating to the exit of members of the previous leadership team, £441k related to the acquisition of Thorite and £1,705k related to the organisation redesign and One Flowtech project.  

Geographical and category analysis of revenue 

The Group operates primarily in the UK, The Netherlands, Belgium and Ireland.  Revenue generated from distribution of hydraulic and pneumatic consumables, bespoke manufacture, commissioning and installation of equipment are categorised as sale of goods. Income from on-site services and revenue arising from contracts is disclosed separately.

No customers of the Group account for 10% or more of the Group's revenue for either of the years ended 31 December 2024 or 2023. Non-current assets are allocated based on their physical location. Revenue recognised at a point in time was £101,571k (2023: £109,953k) and revenue recognised over time was £5,371k (2023: £2,142k).

Some contract works begun during the year were still in progress at the end of the year. For 2024, revenue includes £Nil (2023: £174k) included in the contract liability balance at the beginning of the reporting period.

4. Operating loss/profit  

The following items have been included in arriving at the operating loss/profit for continuing operations: 

Services provided by the Group's Auditor 

No other services were provided to the Company and its subsidiaries by the Group's auditor. Services are provided by other professional advisers as deemed appropriate by the Board. 

5. Taxation 

Recognised in the income statement 

6. 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 during the year.

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 year. For diluted loss per share the weighted average number of ordinary shares in issue is not adjusted since its impact would be anti-dilutive.

7. Goodwill 

Background

Goodwill impairment is monitored for groups of CGUs. The CGU groupings are split across the three geographical segments. 

The carrying amounts of goodwill allocated now stands as at 31 December 2024 are: 

Impairment tests 

The carrying amount of goodwill in each geographical segment was determined by calculating the sum of the carrying amounts of all intangible assets (including goodwill) and tangible assets attributable to that unit. These were then compared with the value in use calculations for each geographical segment based on discounted cash flows of future period forecasts. Management prepared forecasts for a five-year period and all forecasts have been approved by the Board. 

Cash flows beyond the period forecast by management for each CGU were extrapolated at an expected long-term growth rate of 2%. This growth rate does not exceed the long-term average growth rate for the market in which the Group operates. 

Goodwill impairment charges in 2024

In total an impairment charge of £25,620,000 has been taken in 2024, of which £25,070,000 was taken against Goodwill, £246,000 against fixed assets, £284,000 against intangible assets and £20,000 against right of use assets. The split of impairment charge by geographical segment is shown below:

Recent announcements relating to trade tariffs were non-adjusting post balance sheet events; as such any associated impact (which we do not deem to be material) has not been taken into account in the cash flow forecasts used for impairment testing.

Great Britain

An impairment charge of £22,005,000 has been taken; Comprising entirely of an impairment to Goodwill. This leaves a balance of goodwill of £13,127. The value in use calculation is sensitive to a number of assumptions. In arriving at the impairment charge the forecasts assumed a pre-tax discount rate of 15.47% and revenue growth rates of 19.7% in 2025, 9.9% in 2026, 7.3% in 2027, 2.5% in 2028 and 2% in 2029 and beyond. The 2025 growth rate is materially impacted by a full year contribution from Thorite (acquired August 2024). The calculation is extremely sensitive to any movement in these assumptions. With regards to movements in the long-term revenue growth assumptions, the impact of a 1% decrease would increase the impairment charge by approximately £4.4m whilst a 1% increase would decrease the impairment charge by approximately £5.4m.  Movements in revenue and discount rates are considered the factors to which the value in use calculation is most sensitive.

Benelux

An impairment charge of £3,615,000 has been taken; this comprises £3,065,000 in relation to goodwill, £246,000 in relation to fixed assets, £284,000 in relation to intangible assets and £20,000 in relation to Right of Use Assets.  This leaves the balance of goodwill, intangible assets, fixed assets and ROU assets at £Nil as at the impairment date. The value in use calculation is sensitive to a number of assumptions. In arriving at the impairment charge the forecasts assumed a pre-tax discount rate of 15.29% and revenue growth rates of 8.3% in 2025, 10.0% in 2026, 8.5% in 2027 and 2% in 2028 and beyond. The calculation is extremely sensitive to any movement in these assumptions. Due to the Goodwill in the Benelux group of CGUs being fully impaired at the assessment date no further impairment would arise on sensitivity analysis.

8. Net cash from operating activities