Flowtech Fluidpower (LSE:FLO) — Full Year Results

0:01 Good morning, ladies and gentlemen, and welcome to the FLOWTECH FLUIDPOWER PLC Full Year Results Investor Presentation. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to the executive management team from FLOWTECH FLUIDPOWER PLC. Mike, good morning, sir. Good morning. Thank you, everybody, for joining the call this morning. We really appreciate your time. There's a lot happening around the world at the moment, so thank you for taking the time to join us. I'm joined today by by Russell.

0:52 We're down in London today, and we really appreciate the opportunity to talk to you our journey through 2025 and, importantly, our journey ahead as we think to 2026 and beyond. For those of you joining our story for the first time, our aim as an organization is to provide customers across Europe and across the world with power motion and control solutions. And we're an organization that can supply a single component all the way through to an integrated engineering system, and we do that helping our customers to create cost effective ways of doing their engineering and their work, working with some of the the biggest and best global brands with a wide range of products and services, and also making sure that we're bringing on board some of the best engineers in the marketplace.

1:42 For today, just a quick introduction. I'm Mike, the chief exec. I've been in the business since April 2023, so coming up to three years, which seems inconceivable. This feels like there's a lot happened in those three years, particularly in terms of the market around us. But delighted to have been on this journey, and I'm gonna come on to shortly the transformational story and journey that we've been on and why that set this business now up for what we believe to be some fruitful years ahead. Russ? Yes. Just very briefly, I joined the business at the back end of 2018 when, I guess, the world is a relatively stable stable place, actually. So seven and a half years has has flown by. The last three years, I've been working closely with Mike and other members of the leadership team.

2:30 So, yeah, enjoyed the journey today, and then looking forward to enjoying it for years to come. So for our presentation this morning, we're going to just quickly recap on our strategy. Ross will provide some details around the 2025 financials. I will walk you through some business highlights for 2025 and also just some recent updates for the start of 2026, and then we'll just final finish with the the outlook. So just on strategy, and for those of you that are are new to the story as well, FLOWTECH is operating in a world of motion. Motion control underpins critical infrastructure and industrial activity across all major sectors. And the diagram in the middle here just illustrates the industry sectors that we serve, which are plenty.

3:17 Very much involved in in all aspects of industry from the food we eat to bridges that that need to move to utility segments of the marketplace, agriculture, automated production lines. More recently, we're getting quite heavily involved in data centers, which is quite an exciting growth area. Effectively, economies around the world do very much need controlled movement force and flow. And our business focuses in in three principal areas of that, systems, which is very much about fluid to generate force and movement. And that's very that that's very much involved in powering heavy lifting, construction equipment, infrastructure across all manner of different industry segments.

4:04 Pneumatic systems is is compressed air, and that's driving high speed automation and precision control and process control systems all about regulation of pressure, temperature, and flow. And that's about safety, efficiency, and consistency. So that's the world in which we we play. And over the last three years, we've brought together quite a disparate group of businesses, actually, into one integrated platform. That's not been without its challenges as as any business transformation is. But we're very proud to be here today, certainly as we've opened up 2026 and a quarter in, with a very, very clear identity under the one FLOWTECH brand with three simple pillars to our value proposition. The first, our ability to provide products across a wide range of technologies through a high service distribution capability, and that's very much about depth of stock availability and service.

5:01 The second is around services. So we get involved in diagnostics, repair. We get involved in manufacture and subassembly, particularly for original equipment manufacturers. We do on-site services and system optimization, and so this is very much going up the engineering curve value curve. And then, I guess, at the top end, when we talk about those complex engineering solutions, we quite exciting large scale projects where we're designing, building, and integrating complex systems, and we'll come on to some examples of that as we go through the presentation. We work across a very fragmented and complex supply chain, and we're supporting that into different areas of the market. And I guess what we're looking to do here is to connect complex customer needs with our specialist supply, and it is combining that high service distribution capability with deep engineering expertise as a specialist in that world of motion.

5:56 We typically will be working across global component manufacturers, trade. A big part of our business is actually supplying to distributors and resellers with the technologies that we that we have available. We we support systems builders, maintenance providers, and, ultimately, end users operating critical assets. So that's the the breadth and scope of of how we we go to market. We We set out our strategic plan in late twenty twenty three, and very much, it was made up of an a a short term performance improvement plan, but then also backed up with a very, very clear three pillar strategy that would allow us to ultimately drive a more customer centric, lean, and scalable platform for growth in time.

6:42 The first is very much around customer focus and really understanding deeply our customers, But but underpinning that, creating a much more diverse customer base, and I'll come on to that in terms of some of the pivoting that we've done into high growth segments of the market through our self help activity, but also recognizing digitization data and and ultimately AI is is transforming how businesses go to market. So creating that omnichannel approach has been a key underpin of our strategy, and, ultimately, we want to outgrow the market. The power of one has been right at the center of the last two years of of business transformation, bringing everything that we have as a company under one singular value proposition for our customers, but, ultimately, consolidating our operating model and rebranding our business and ultimately driving scale.

7:33 And that, for us, gives us the belief that we can move this business in time towards mid teens EBITDA margins. And a Board of Motion is very much about expanding our products, our services, and geographical reach in the areas that we've we've previously discussed there. Across Europe, this is a 30,000,000,000 market opportunity, so we have a lot a lot of upside terms of market consolidation as we go forward. And so building that scalable platform is very, very important for us. And everything we do being underpinned by digital and data, and we've been building some some important infrastructure to support that. And then in terms of that strategy, it's underpinned by six defined growth engines. I'm not gonna go through them all in detail here. You can look at those in your own time. But everything that we do, all of our priorities as a as a management team is is hinged around these six areas, and very much that's driving a lot of our focus as a business.

8:28 So just to recap on that strategic road map since 2023 or certainly from the second half of twenty twenty three, That was all about diagnostics initially from coming into the business and trying to understand how do we improve performance and also get some control particularly around restoring operational discipline, which was was sorely needed particularly in terms of our service proposition to market. And we also made some some immediate decisions in terms of pairing up our leadership capabilities in order to scale, bringing leaders into the organization that perhaps have worked in larger organizations and perhaps perhaps could see what the future needed and then how we scale towards that. In earnest in 2024, we kicked off a a fairly stringent restructuring and integration program. We brought 17 brands all under one FLOWTECH, which was was concluded actually during the start of 2025.

9:22 And that was very much about simplifying the operating model, building out some group functional capability to to drive better economies of scale whilst recognizing our regional nuance in operating in GB in the island of Ireland and in The Benelux, and in time, building a scalable model that can be expanded out into Europe and also exploiting our export capabilities that we have as an an organization. That continued into 2025 where the focus there was was very much on returning to quality growth, but also completing the work around our digital ramp up, delivering the the digital platform and data foundations, but also making sure that the organization was was embedding those ways of working with a real focus on sales discipline, sales growth, and pairing up our marketing engines as well. And then we'll come on to the story of of that improvement certainly coming through in the second half of the year and building that momentum in the sales pipeline and the order book as we've moved into 2026.

10:26 And when we look at the next two two years, years, '26 to to '28, this is very much now all about leveraging the growth platform and embedding the culture around one FLOWTECH. So that's building on those foundations over the last two to three years. Making sure that we absolutely convert that platform capability into a sustainable growth and profitability period. And with that, we'll come on to the updates on the three acquisitions that we've made up to the end of twenty twenty five, and then more recently at the start of in February, sorry, the the the q plus acquisition and the Benelux, which is then providing us a a bigger platform in order to scale in Europe as well. So we've completed the bulk of the transformation, and this is about leveraging the growth platform and embedding our culture.

11:16 So just a few more words then in terms of the strategic focus from here. Very much as a as a as a leadership team, three areas that I just wanted to strengthen for you. The first is scalable integrated platform being in place. We believe that we're in a much stronger position than we were three years ago, and so our strategic focus now is very much on growth. It's optimizing the operating leverage that we've built into the system that ultimately will be driven as a distribution and service business by that top line growth. But it's also then exploiting digital data and AI enablement and that journey as we go forward. We're also heavily focused now on deleveraging, and that is certainly set to improve. And we do expect improved EBITDA and increased free cash flow as we move forward, notwithstanding within that real tight control of capital expenditure.

12:10 We've obviously been enveloping that up over the last two years as we've been working through the transformation journey. That's certainly looking to set down to more to reduce levels. And that continued work around working capital where we've done a great job, and there's still more work to do. And Russ is gonna talk to that as we go forward. And then we will continue to look at earnings accretive inorganic growth, as I've said, expanding the product service and geographical reach in in what is a very fragmented market. And I think we've proven over the last two years, notwithstanding opportunities to acquire companies that perhaps have been struggling, but also, you know, value based strategic acquisitions such as Q plus. Our focus is very much on integrating and growing those four existing acquisitions, and we continue to to explore further opportunities to strategically grow, aligning to the need to enhance shareholder value forward.

13:08 So those are the three key areas of our strategic focus as we look ahead now. So on that as a backdrop, I'll pass over to Russ who's going to give us an update from a financial perspective. Just the picture on the right hand side here is just an illustration of type of projects that we get involved in. This was a project we completed a couple of years ago in London, and what you can see here is a bridge that moves up and down in order to let pedestrians cross. And these are hydraulic the systems that we got involved in designing and building and installing on that particular project. So, Russ, on the financial highlights. Yeah. Thanks very much, Mike. I mean, those six boxes there probably do capture the highlights, but perhaps next slide, Mike, because I'm going to touch on each of them. So I'll perhaps deliver you a headline and a sub headline on the key components of the profit and loss account.

14:00 Firstly, in terms of turnover, revenue did increase by 9%, but on a like for like basis, fell back by 3%, albeit the sub headline there, it's very pleasing to see the story of two halves there, in that the second half of the year showed strong growth relative to its comparator, which materially mitigated against the deficit in the first half. The actual numbers half year half one, half two were £49,000,000 and just over £50,000,000 And that's unusual for a business like us to outperform in the second half because of the typically soft months of August and December, obviously, pointing towards holiday periods in that regard.

14:47 So we actually ended the year with strong momentum, and I'll come back to that when I talk about EBITDA actually. Within our geographies, there were similar like for like declines in each of the geographies actually, 2.5% in Great Britain and 35% in Ireland and Benelux, respectively. As it relates to gross profit margins, 100 basis points improvement in 2025, which builds on some decent progress in recent years. If I relate that back to maybe four or five years ago, we were typically in and around the 35% region at that point in time. And actually, when you take account of the impact on the acquisitions that we've made, the underlying improvement is a tad stronger than 100 basis points actually because notwithstanding a lot of good stuff we've done in particular as it relates to FLOWREIT, the gross margins in the acquired businesses are a little bit lower than the legacy businesses.

15:48 So we're pleased with the disciplines over gross margin. And equally moving to operating overheads there, to achieve a £600,000 underlying reduction, which in percentage terms is 4%. Again, we're quite pleased with that, not least against the background of the increase in national minimum wage, which is a massive issue for us given the demographics of our people and the employer national insurance increase. That probably cost us £05,000,000 So had it not been for that, I think it would have been pointing to a more like 7% like for like reduction. So not that easy to achieve when you're faced with certain inflationary pressures.

16:36 In terms of the EBITDA story, I mean, linking to the comments I was making about the differential in turnover, H2 stronger than H1. For the first time, I can certainly remember the EBITDA performance in the second half at £4,200,000 is stronger than the first half at £3,500,000 And we ended 2025 with strong momentum in a number of areas. And I could point there to the strength of the order book and pipeline, and I'll touch on that in a short while as it relates to our major projects actually. I could talk about the tremendous progress that we've made with the acquisitions, and I will talk to that in a slide or two's time. And it's pleasing to see some of the sectors that were significantly down trading and some green shoots of recovery and pointing in particular to the crushing and screening sector with that comment, which has got some focus in Northern Ireland.

17:32 And equally, the progress we're making on the digital agenda, which Mike's going to touch on. Could go to the next slide, please, Mike. So as it relates to debt, I've used the expression once. I'm going to use it again that this itself is a story of two halves because in the first half of twenty twenty five, we absorbed cash of £3,400,000 And in the second half, we substantially clawed all of that back with a generation of 3,300,000 The reason for that is primarily linked to the working capital cycle. You'll appreciate at the end of the calendar year, you've typically got a low receivables book, again, with reference to the short trading month of December. So that always happens. You absorb cash in the first half, you claw it back in the second half.

18:23 The the shape of that graph for 2025 is not dissimilar to the shape of the graph for 2024. So I I thought the best way of summarizing where we're at and pointing to Mike's comment about going on a go forward basis, cash conversion should be a lot stronger. If I look back for over a two year period, our aggregate EBITDA underlying EBITDA, that is is 13,600,000. And when, I look at the aggregation of the capital investment and the necessary restructuring costs, they've been significant. They've been 10,600,000 in that two year period. And if I look at the, combination of lease and interest costs of 7,500,000 and, dividend and tax of 2,500,000, if you do all of those sums, you come to a deficit of 8,000,000.

19:18 And it's that strong discipline over the working capital that Mike mentioned, 2,100,000 in 2025. The box was bigger in 2024. It was more like 6,000,000, actually. And that's enabled us to fund that blend of surgery, if we call restructuring surgery, and capital investment without increasing the debt position. Importantly, on a look forward basis, obviously, we're backing ourselves to increase our profitability. Our EBITDA is set to be materially stronger. You know, it's trending in the right directions. And equally, we won't be performing, anything like the same degree of surgery. In fact, we feel stable with the growth, growth, growth is the mindset now. The surgery is complete.

20:09 So the aggregation of CapEx and restructuring costs will be lower. So we should see, as the consensus numbers will point to some reasonably strong debt reduction over the next two or three years. Thank you, Russ. So just moving on to the business update. This is a fuel system that we installed at University of Bath. Just to give you another idea of some of the work we're doing on the engineering side as an organization. So we've been consistent certainly through late twenty four and into 2025 around self help activity, which is driving growth momentum because the market around us, certainly over the last two years, has been very, very difficult. Industrial markets and PMIs have been very suppressed.

20:57 If we look at things like construction PMIs, they continue to be very difficult even through the second half of the year. And so, you know, we don't really see that the market has been our friend. But, you know, our our view has been we've we've needed to double down in key areas and stay very focused and drive that self help activity. Now here, I'm gonna talk more around self help for growth. Russ just mentioned around gross gross margin improvement, which has been sustained over that that two year period, in fact, longer than that, but also the work that we've done particularly around our cost base and making sure that the business is operating in a more efficient manner. Those are also areas around self help self help that we've been focusing on. From a growth perspective, these four areas, wanted to just expand on. The new digital platform which we launched in August last year in The UK, the work we've done around products and service expansion in the year, which has given us some really exciting new growth opportunities, the fantastic success we're having around some of the engineering projects, not just the very large projects, but right across the board, and with a strong order book and an increasing amount of project work that's coming through.

22:11 Notwithstanding, you know, the market has been holding back investment. The market has been holding back on on cash because of worries of inflationary pressure. It's pleasing to see in the second half of the year that we actually saw the building of projects in the order book, which was which was good, and the inorganic opportunities, which we'll come on to as well. Right at the start of the year, we we took a a strategic decision to make sure that we were doubling down our our sales and marketing efforts in what we felt to be slightly higher growth sectors of the market, noting that some areas of our customer base have been more suppressed. Russ mentioned crushing and screening, which did pleasingly start to show some signs of recovery in the second half of the year. But there are segments of the market which do remain more suppressed linked to construction. So that focus around our trade customers, aerospace and defense, infrastructure, data centers, and areas like transportation, you know, have been really important pivots for us. And we've seen some some good successes.

23:08 In fact, when we look at our sort of top 50 uptraders and downtraders through twenty twenty five segments of the market, such as food and beverage, defense, transportation, agriculture, you know, and some of the the the water infrastructure projects that we've been involved in have certainly delivered us some some exciting growth. One of the reasons why we've been able to outperform in the second half of the year. But segments such as construction and crushing and screening are still a bit laggard from where they were. But we are seeing more of the segments of the market now moving back into a state of growth than those that aren't, and that's an encouraging sign. We don't believe that the market has has improved through 2025 nor do we really expect the market to get particularly better through through 2026.

23:57 And so the self help focus absolutely continues. Underpinning all of that has been a ruthless focus as a team on the customer experience and on customer service. An area that we're very, very proud of sustaining now service levels, which we believe are best in class. We're we're maintaining out of our fulfillment center 99.8% on time to promise and a 97% stock avail stock availability on our core ranges. And that's important because when things break in industry, there is a requirement to be able to respond to that very, very quickly and have the stock available. I'll come on to that in more detail as we go forward. So if we just take the digital platform transformation, I will just point out that this is more than just a a new website that we've launched. We've actually taken a step back to look at the complete digital platform and infrastructure that we want to be building to help us to scale for the future.

24:54 So it's part of the website is part of a of a scalable digital offering, which is very much replacing outdated legacy platforms, which was certainly a constraint to growth, and I've come on to some examples of that. But, also, within that, because we do have such an important long standing with distributors and resellers, we also provide white label paper based catalogs and have done for over forty years to that customer cohort. There has been an an important transition towards the requirement for a white label website and digital platform. We're pleased to to say that during the start of 2026, we're now starting to roll out the web platform to those trade distributors as a white label solution as well under the brand of Feet Digital, which is our new go to market brand helping our industry to digitize.

25:46 So when we think about the website, which we launched in August, just a few data points we thought were useful to share. When we looked at all of the customer feedback over the last two years around the previous web platform, a lot of the negativity was linking to the customer experience, you know, how easy it is to find a product. Quite slow. The load time on it was between eight and nine seconds, for example, and it wasn't as stable as we would like. We did suffer from outages. And, for example, when we wanted to amend pricing or we wanted to upload en masse a large scale new range, for example, the website couldn't accommodate that, and it was very painful for us. And so we're delighted to to see with the new web platform that the order's completed within five minutes, which is an important statistic, has increased now to 48%.

26:36 So we're starting to see real progress there. And and, of course, you know, a fact of that, if you like, ease of ease of working through the website, there's a 31% increase in customer satisfaction, which is an important indicator, arguably the most important indicator for us at this early stage of going live with a new platform. We've eliminated downtime risk. The platform is incredibly stable, and it's also been built with very, very strong cybersecurity and information security within it. And so that's important as we're forever under attack, you know, of of external forces in that regard. We're really pleased to see in the first six months of go live the stronger demand and conversion within the new web platform.

27:23 Traffic is up by 24%. So, you know, we're really seeing improved acquisition efficiency within the website. But, also, you know, we're now seeing 70% of all customer orders through through the product distribution sales, which is a key area for the website as we as we measure it today, and that really is starting to demonstrate that increased digital channel adoption. Still lots of work to do, but we're really pleased with the progress. From a cost efficiency point of view, we've seen a 78% reduction in infrastructure costs with the platform, which is quite material on a month on month basis for us. And the delivery capability is really transformed. So we're moving from and delivery capability there in terms of being able to release updates and improvements to the website. You know, were we able to do something on a quarterly basis. We can now we're much more agile. We can we can make changes on a biweekly basis. We're doing releases all of the time, and we're doing that with zero downtime as well. And that's really comforting to know. Certainly, with my background and some experience of operating digital to at a much bigger scale than this, you know, it's really good to see that core infrastructure in place for the future.

28:35 And for me, you know, critical area is the product scalability. You know, the the we work with 2,500 suppliers. We've got access today to around about 200,000 plus products, but there's no reason why we can't expand that exponentially over time as we expand our product and brand portfolio as a business. And the new platform, platform, built scale into our product information management system and into our product master data management to allow us to, you know, materially increase the number of products that we can ingest at any point in time. But, also, if we want to do price changes, for example, you know, we know that the platform can accept that and it and will be very, very stable. Since we've gone live, we've been able to introduce another 130,000 stock keeping units into the web platform.

29:24 We were were constrained to do hundreds at a time previously. So that really does give us some some extra firepower as we want to use that as a channel for growth going forward. And now we've got it up and running. We've got some exciting forward plans, and and, you know, we will continue to invest and grow in the digital platforms that we've built. As I've said before, the website is only one component of an integrated digital platform, and this is all about driving multichannel growth, notwithstanding starting to bring our engineering services capabilities to bear in the web platform as well. So, you know, we're going to be launching areas of self-service and conversion. So, for example, online quote tools is important one. There's still got a lot of manual tasking that happens in the business.

30:11 We want to be utilizing the AI tools now built into the into the machine to drive more cross selling and upselling opportunities to attract more new customers into our environment. We see market share growth and and scalability internationally of the web platform. We will be rolling out the platform into the Benelux and Ireland early next quarter. Finally, really starting to drive competitive differentiation, so not only being able to sell products and showcase our services, but starting to introduce things like product configurators so that we can really start leading the way as it relates to technical engineering customer experiences in a digital world. So we're pleased with the progress. Very early days. And then just some other business highlights to share. We made two further acquisitions during the course of 2025, Allsuede and Thomas, which is well documented.

31:03 Limited consideration on both of these acquisitions, relatively small, but really, really good strategic fits and also gives us new geographical footprints of which we can build out from. Russ will talk a little bit more about these shortly. Introduced a number of new supplier partnerships in the year. One particular partnership with SMC Corporation, a world leading fluid control and automation solutions provider, has really really given us a springboard to drive incremental growth, and that continues certainly through the second half of twenty five, and we continue to see that momentum building at the start of 2026. On the compressed air side, we've been really proud to reconnect with HPC Kaiser, a leading global compressed air provider, and we've now won new territories across The UK where we're providing compressed air services to bigger territory to provide accelerated growth.

31:58 And also, we've we've got new launches of additional brands such as Payab, Gast, and Graco. And these are quite significant pneumatic brands that we brought into the group through the FLOWTECH acquisition that we've now increased our stockholding, and we're placing that into our FLOWTECH offering more broadly to our customers. So just some examples of those new supply partnerships, and that's going to be featuring now as a key part of our growth strategy going forward as we look at our new product introduction plans future. Ross, do you want to talk about the the new major projects that we've we've won? Yeah. Briefly, Will. Yeah. Mean, major projects is an area of our business that we've invested in in the last twelve months. The work which we're currently doing, there's reference there to to bridge contracts in Ireland, aggregate €9,400,000, provided you manage them properly, they're super profitable.

32:55 And we view the major projects growth as a key, key part of our planned organic growth over the years to come. So we've invested in that part of the business. We've invested in some good quality people. And actually, when you do that, it's unsurprising that when we, link it to things like employee engagement scores, obviously, really important metric, that's the part of our business that scores higher than any. So we're excited about what that part of our business has done, is doing, and most importantly, should be capable of doing with reference to the opportunities in front of it going forward. And we also believe that these infrastructure projects that we're involved in, you know, these are long term. You know, these are less sensitive to market fluctuations.

33:43 And so, you know, we've got a long pipeline of opportunity here, and we will continue to grow our capabilities in that regard. Another key area for FLOWTECH has been optimizing our branch and service network, notwithstanding welcoming new locations into the group through Thorite, through Woolswayze and Thomas, but also a modernization program of existing locations, which continues. In the year, we've been delighted to move into new premises in the West Midlands, which was a combination of a of a relocation of a unit. But, also, we've we've established a new process center of excellence in the West Midlands, and that's on a a very large well, one of the largest industrial states in Europe. I'm very excited about the opportunity there with that new facility.

34:29 We've relocated a Thorite location in South Yorkshire. We've opened a new engineering solutions center in Leicester, an area with some very, very large standing original equipment manufacturers where we already have existing relationships, and that's very much about putting some capability on the ground there to be able to accelerate our growth vector within those customers and within that particular region. We've welcomed and Thomas with new locations in West Brom and Ashford, and we've been doing modernization in both of those locations as part of the integration plan. And a quite significant piece of work has been done in our Benelux business. This is prior to the Q plus acquisition in February where we brought together two legacy locations in Rotterdam into one new state of the art location near Rotterdam Port, which is a huge big area for for for growth and and for commerce and for industry.

35:26 Notwithstanding, we also have our existing location in Dayventer, which is a fulfillment center, and we've actually started to integrate the businesses together as they were trading under different brands and didn't really have any connection in the past. We're now operating very much as one FLOWTECH in The Benelux. We've built a platform by which we now can integrate Qplus onto, which has been an important part of our journey. Also is is with a view of scale, but also a view of optimization and efficiency as we grow, which is an important factor. And then just in terms of the performance momentum from the tactical acquisitions, and then we'll just say a few words on q plus. And perhaps, Russ, I'll just pass over to you here in this regard. Yeah. Thanks, Mike. So I'll touch on the q plus acquisition, which is quite different to these three shortly. But the three on the screen there were were all all acquisitions of distressed businesses.

36:17 The first was out administration, the second was out of liquidation. And when you're seeking to negotiate deals of distressed businesses, it's quite handy that I've got twenty five years experience working in turnaround and restructuring. So on occasions, I used to be an administrator or a liquidator. So quite handy when you're at the negotiating table. So, August 24 was '4 I, all sway is Thomas, partway through '25. But we paid, literally nothing for these three businesses, which manifests itself in aggregate 2,400,000 of negative goodwill. We inherited about 18,000,000 of turnover, and the businesses combined were probably EBITDA loss of 1,500,000.

37:08 But I'm pleased to say really pleased to say that the exit run rate as we left '25 and entered '26 was those three businesses combined, generating approximately £20,000,000 and growing of top line and approximately £2,000,000 and growing of bottom line EBITDA. So, obviously, I'm very, very pleased with that. And if we think briefly about the acquisition of Q plus which is different end of the spectrum, far from a distressed business, a prosperous business generating nice positive EBITDA. And if we take the four acquisitions combined and think about what they're likely to contribute in the current year, it will be well in excess of £30,000,000 of top line, I think in excess of £3,500,000 of EBITDA.

38:03 And when you take account of the pound notes paid out both in terms of acquisition costs, of which there was nil on the three distressed, but maybe we've put a little bit into the working capital, sensibly so, you're probably talking about 7 or 8,000,000 of cash that has gone into those four acquisitions. And the fact that they should generate, you know, close to 50%, if not 50% of that 8,000,000 in one year, we think means that those deals are, you know, coming together really quite nicely, actually. And then just a bit of an update on Q plus then, building what Ross has just said. We were really pleased to welcome Q plus to the group in in early February, very much an earnings enhancing strategic acquisition.

38:53 This business, around about 11,200,000 and generating, you know, good accretive EBITDA margins. One of the largest independent pneumatic and air specialist businesses in The Netherlands, A great business, great culture, working out of one location with a very, very strong customer base, primarily OEM and MRO, but with some trade and reseller customers as well. Very much a business with deep technical heritage and roots, so have engineering and design expertise, in house assembly and prefabrication capabilities, which we don't have today within that particular region, particularly in the world of of pneumatics and and air. The industry spread is very, very broad and wide, but, also, we're excited with some of the customers there in good high growth sectors. One being, for example, food and dairy, where the business has actually built out a known brand at, which is very much specific towards the the dairy and agricultural markets.

39:57 And, again, there's opportunities within the group to look at synergies here both ways from capabilities that we have within the wider group, but also capabilities that Cube Plus brings that we can bring back into the group. So we're excited by the by the opportunity. This doubles the size of our Benelux business, and gives us a stronger European footprint. And it very much aligns with our strategy, and it brings a much deeper capability and some fantastic people with great experience into the group. That's as much as I'll say at this point on q plus, and I'll update on the outlook just how we're performing at the moment. But fair to say, no surprises. Really pleased with the acquisition, and it's progressing extremely well. Then I just wanted to to touch on our ESG 2030 plan. We refreshed the ESG strategy during the the 2024 period, and we actually introduced our twenty twenty thirty targets, which we've been working hard on linked to the United Nations sustainable development goals as as outlined here.

41:01 For for me, it's it's always useful to look at some external data points. The the ICG score on the right hand side, we can see very, very strong progress based on 2024 over 2025 in in all key areas of of measurement, which is important. But for me, you know, whilst 2024 was about embedding a lot of the the targets and starting to get activity moving in earnest, I've been really delighted with the progress that the team have been making collectively during 2025. If we think about the environmental aspect, you know, carbon reporting quality has improved. You know, we've seen an emissions reduction of 35.4% in the year, which we're delighted around. And examples of that, you know, sustainable packaging now used across all of our UK sites, and, obviously, we're rolling that out wider across the group.

41:50 New employee assistant programs and well-being programs, which which have been well received by our people. Health and safety training has increased by 44%. Not not we weren't doing that before, but we've just put extra emphasis and extra rigor around these things. And overall, I think we're making good progress against our our goals. Importantly, underpinning all of this is is culture. Creating a one FLOWTECH culture from a business that was operating with 17 different cultures ultimately three years years ago, ago, you know, has has not been an easy task. You know, it's it's probably one of the hardest things in business transformation is bringing everybody together on a journey. And we launched something called our Blue Book just before Christmas in q four, which lays out now very clearly, you know, what what it means to be one FLOWTECH, how we're gonna work together, our purpose, our our shared values as a team. And we're we're moving in earnest now around our loan development programs internally to really bring to bear what it means to work for FLOWTECH.

42:52 And we wanna create that that environment now where people really do feel very proud to be part of the FLOWTECH journey, and that certainly is is progressing well. We're also working very hard in areas such as our our diversity agenda. 66% of all internal promotions in 2025 were to women, and that's something that's been a real focus for the business has been making sure that we get an improved balance in terms terms of of gender gender diversity, but but but diversity overall. So we're pleased with the progress around all aspects of our ESG goals as we go forward. So just in conclusion then on the on the outlook, again, just an example here of of some work that we've been doing for an energy management company in West Yorkshire.

43:37 This is designing and installing an automated pneumatic solution. So, you know, it's good to see in real time some of the work that our teams are doing out there. But look on Outlook. It's it's an unsettled world out there, I think, is the summary. Our current trading is in line with our full year expectations. We've been very, very pleased with the momentum momentum that that we we exited '25 with. I'm pleased to report that our order book and sales pipeline are continuing to demonstrate strong momentum, and that builds confidence beyond q one as we go forward. The focus that we've had on higher growth sectors is continuing to give us opportunities for accelerated growth. The new digital platform is performing very well. We're seeing month on month improvements, so that's certainly showing positive signs.

44:26 And and we keep putting work into making sure that we're listening to our customer feedback and making relevant improvements. Management focus, as we've said earlier, on all aspects of capital investment and all aspects of working capital, and that confidence that our cash conversion in 2026 will be much stronger than recent years is a is a key focus area for us as a leadership team. And I'm pleased to report, as I've just mentioned, that Q plus performance and the integration process that remains ongoing is very much in line with our expectations. And in fact, we're we're delighted by the way the team have embraced this opportunity to become part of the group and the leadership across from CUBE plus who are now helping and leading parts of the FLOWTECH estate within the Benelux.

45:13 That's really, really going well, so we're pleased with it. Notwithstanding, it would be wrong of us not to mention the continued market headwinds and the the, recent activities that are pursuing in the The Middle East. What I will say about this is that we've done a very strong risk assessment around our supply chain, and that remains very robust. We don't, at this stage, see a material concern around our ability to maintain our stock levels, and we're tracking our shipments around the world. And at the moment, we're very confident that that will be sustainable as we go forward. Clearly, the the topic of of rising costs is going to impact market pricing. And, ultimately, it's our goal to make sure that we do what we can, obviously, to mitigate that. But where we can't mitigate that, then we will be looking to be passing those increases on to market, which which is is which is the sensible approach.

46:07 And, ultimately, in terms of our customers today, we're actively talking to our customers, trying to understand implications for them, trying to help them through this period. But, ultimately, at this stage, we're not seeing yet any material delaying or pushing back of projects or anything in the order book that's that's coming under under pressure as it relates to the the market situation around us. So, you know, we're monitoring the situation closely. Clearly, you know, we we'll we'll manage accordingly. But at this point in time, trading remains remains positive. A final word I just wanted to touch on AI. There's not many discussions I have or meetings that I go to where I isn't mentioned or I'm not asked questions around AI.

46:53 I think we're taking a very, very sensible approach as it relates to AI. You know, it's an area where everybody is learning in the business, and our suppliers are learning. Our customers are learning. We're very much utilizing AI today in areas where we think we can maximize the the short term benefits, product data quality, search, helping our customers be able to to get to the products that they want more effectively using AI, customer insight and analysis, so reducing the amount of time it takes to produce the insight. And and also where there's manual effort, and we can use data in that sort of engineering work or in that customer service activity work, those are all areas where we were implementing strategies in order to help us to be more effective and more efficient.

47:39 Of course, we are exploring more advanced AI, but the priority right now is making sure we get real term, near term value from AI in the core of our business, and we don't want to race ahead of ourselves or race ahead of foundations our as we're building the capability going forward. So just a a word there on on AI. So that brings us to to questions. So we'll just come out of the screen. Hopefully, that's been a useful update for today. And And Russ, we'll just quickly move to the questions over here. Yeah. I'll just take the the question on how scalable is the product range expansion strategy, and are there limits from supply capacity or competition?

48:25 From past experience in this space, there aren't really limits, but, strategically, we will set the limits. You know, we want to operate within a world of motion. I'm very, very clear that our swimming lane is that world of motion. So we want to be a specialist within motion control. That starts very much within the world of FLUIDPOWER, hydraulics, pneumatics, and and process. But we will be looking to expand out our our product offering in in associated and adjacent areas to that. You know, what we don't want to become is a generalist, and we don't want to become a a a more broad ranging maintenance repair and operations company because I've had experience there, and and that's not this business. This business is a specialist, and we want to stay within our swimming lane, and we want to add products and and services to our portfolio that allow us to go up that value curve and remain as a deep expert and a deep specialist.

49:22 There's still plenty of runway for us to materially expand our product offering and our supplier blind card in doing so, but want I to stay very, very focused. Rush, do you want to pick up a question? Yes. Sorry. Just scrolling down. We've got about 10, I think. Okay. Much of the costs are exceptional, and what is the normalized EBITDA? Well, as it relates to exceptional costs within the separate disclosed disclosure, restructuring costs in 2025, which is another name for exceptional, 1,500,000 in 2025, and that was lower than the 2,500,000 in 2024.

50:09 As I said earlier in the presentation, the aggregation of capital investment and restructuring or, I might have used the expression, surgery costs, it was not insignificant. But 2.5 became 1.5 should become very little indeed in 2026, which points towards the confidence we've got in much stronger cash conversion. Having said that, I'll just pick off a question much lower down the list. The question is around what would a normalized cash conversion percentages look like. And I think what we'd say there is that we'd be disappointed if we can't achieve 30 of our underlying EBITDA translating into debt reduction, hopefully a bit stronger than that even.

50:55 If you look at the numbers in the marketplace, which now go out to 2028, you'll see old fashioned debt numbers reducing from today's 15,000,000 to more like tomorrow's 5,000,000 over the next couple of years. That's what we're hoping to achieve. And it obviously points towards, I think it was the middle point on an important slide, I think it was Slide eight in this deck, which those three key priorities as we look forward. Thanks, Russ. I'll just pick off one around stock, and then I'll pick off the questions around Q plus if I may. Do all the do all these stock keeping units mean that you have to hold huge amounts of stock if you were to provide quick reactive service? It's a great question and and one I I welcome to answer, actually. The answer is no.

51:44 You know, will we be looking to increase our stockholding? Yes. As we bring new brands and and and new ranges into our portfolio, there will be a a desire for us to be able to put more stock in. But as we've said before, you know, we will be carefully managing working capital. In this space, what we need to be doing is stocking products that are moving with high velocity. And, And, ultimately, there is an acceptance that there will be a slower moving range of products, which will be on more of a back to back relationship with our suppliers. We would still put those into our web assortment, absolutely, but not everything that we put onto the web will need to be stocked. What we have done is we've built tools into our into our product master data system so that we can be a bit more intelligent to identify where products are starting to get regular and hits from customers. And if we were to put new products into the assortment, we can start to monitor and measure where those customers see those high move moving products.

52:42 Same, we work with our suppliers to try to identify what of their ranges is high moving. We'll always be making sure that we're we're being very, very active in managing the working capital and the stockholding effectively in that regard. Now we do have capacity for growth within our fulfillment centers, but we'll be doing that in a smart way. And And so so it won't always require us to be putting stock in from day one, certainly. And then in terms of the Q plus questions, great question here. What can the rest of the group learn from Q plus? And, actually, I think you've you've also tried to answer the question there. Higher engineering led solutions, higher EBITDA margins. You know, could that be transformative for the group? I think you're absolutely right, actually. You know, for me, what I'm really impressed with with q plus, it's very focused on on a a smaller range of customers actually and providing a very, very technical service to those customers.

53:39 It is dealing quite a lot with systems builders and original equipment manufacturers and then looking at complete solutions. So they're not just looking at selling an individual product, although that is part of their business, but they'd be looking to work with an OEM or an end user to design in a particular particular product that can help them to save money or to to reduce costs or to improve efficiency. And I think that that level of technical knowledge and experience that Qplus has around the technology that they're specialist in is really, really impressive. And we already do quite a lot of that within The UK, particularly in our engineering solution centers, but I'd say that Q plus is a bit more advanced when it comes to the pneumatic and compressed air side, and we will be looking to be bringing that capability back into the other parts of the group as well. And there was another question. The number of SKUs that Q plus deal in is significantly lower than within the core business.

54:30 How quickly can this be ramped up? I'd say two things on that. One, you Q plus operates with a much smaller targeted customer group today. And as I said, it's more levered towards original equipment manufacturers, so do tend to carry a slightly narrower range, albeit they've also developed a very, very strong own brand, which we believe we can bring into the group. But we're also looking to open up the web platform in The Benelux during the first half of the year, of which we'll be bringing a much bigger assortment for q plus to take to market as well. So I think those those topics combined will mean that as part of the integration plan, we'll start to see some traction on that through the course of 2026 and beyond. Russ, do wanna pick off another question? Yeah. I'll counter through some numbers ones. What level of depreciation are you anticipating in the year?

55:20 Approximately the same as 2025, which is 4,100,000 is the answer to that. That obviously takes account of old fashioned depreciation as well as new world depreciation as it relates to right of use assets. Assets. The question about what will the level of separately disclosed items be going forward? I've talked around the material reduction in restructuring or surgical costs. And the other big one over the last couple of years has been impairment of goodwill. There wasn't any impairment of goodwill in 2025. There was some impairment of tangible assets and right of use assets as it relates to the Benelux business, all of which is obviously noncash and it all leads to looking forward three, four in perpetuity even in terms of your financial forecasts.

56:09 And you're not allowed to be particularly bullish in those assumptions and the algorithm spits out the necessary need to impair assets. Clearly, with our EBITDA recovery story and the belief we've got in all of our plans, we'd be disappointed if there's much, if any, impairment in '26 and beyond, to be honest. So I'd like to think that's behind us. There's a question about the company used to pay a dividend, but no future returns have been forecast. When do you feel you might be in a position to do so? But I guess, everybody almost everybody has a different view on this, don't they? But, we'd like to get back to paying a proportionate dividend. Of course, we would. I think, you know, it gets discussed regularly around the board table. I think it will be discussed, more so when we've improved that EBITDA and we've reduced the debt by into the deleverage plans. If the EBITDA is in excess of debt, I think we're very definitely back in the dividend game. But until then, I think we'd just rather, you know, play to that middle point on slide eight.

57:21 Let's deleverage the balance sheet first and then and only then consider the quantum of the dividend return. Thanks, Russ. A couple of more commercial questions I'll just pick off. One about the pipeline. So how much higher is the pipeline versus this time last year? What I will say is that when we opened the the books in January, if we exclude the major projects and and the two very large bridge infrastructure projects, then the pipeline was 20% higher in the opening of January than it was in the opening of January 2025. And what I can say is is that that sales pipeline has has continued to grow well through the first quarter of the year and starts to then transfer into order book to to the point of having that forward confidence as we look from q one.

58:12 If you if you include the bridge projects that we've got running through as well and and products projects within within the major projects arena, that sales pipeline increases exponentially. But, you know, for me, what I'm interested in is is the in year sales pipeline. Some of those larger infrastructure projects that are in the sales pipeline, we could win them this year, but then ultimately will deliver deliver they deliver in in '27 and '28. So I just want to be careful in terms of expectation setting around that. But, clearly, there's a long pipeline of opportunity that we have looking out now almost three years in that regard. The last question that I saw at the bottom here, thought was a really good one. And, I didn't say I didn't point to this, but could you outline the opportunities for the group in areas such as defense and data centers, please? And are we committing more resources here given their To me, examples of of what we're doing in the food and beverage sector, which is also a high growth arena.

59:37 And there's also, you know, just a little bit there in terms of what we're doing around data centers in that regard. I think what I would say is is that, you know, we're not we're not materially investing up in terms of our our teams in these areas. You know, as we brought the business together under one FLOWTECH, what we've actually identified is that we have some really, really strong capabilities across the group that when we combine it together, we can we can create a complete solution for data centers, for example, or a bigger solution into the defense and aerospace sector. Because when you start to unpack these different businesses that we had and the types of customers that they did they they work with, and we're now starting to bring the data into our customer data platform, we can start to see where we've got patterns of of opportunity.

1:00:25 And so this is very much around focusing our teams now as as a collective towards these segments of the marketplace, diverting some of our focus in terms of our sales effort so that we can we can obviously extract more value. Data center specifically, we've we've exhibited at Data Center Island early late last year, and we've also just completed Data Center UK in London, which is a huge multiday exhibition. And we've now created, you know, quite a suite of capabilities there in in an industry sector guide within that segment of the market. And we've also got some very strong projects that we can talk to. And so this is arming our sales teams. It's arming our engineering teams with broader information around the full group capabilities that we can then start to take to market, arguably something that we've not done before. As we continue to see traction, of course, we will make the right level of investment and continue to bring the right experts into the business.

1:01:25 Probably remiss of me, was one on defense. But the same pathway follows. We already do a good amount of business into different areas of the defense market. We haven't brought that all together into one proposition, which we've now done, and that allows us to then start to engage in those industry sectors in time. Ross, any other ones you wanted to pick up? I'm conscious we're at time. Yeah. I think we are at time. Just a quick one. One. What's your full year underlying EBITDA for the current year? Well, the 2026 consensus number, I think, is 10.2. We have three sets of numbers out on us. 10.2 is the average. And do you expect to issue more shares this year? No plans to do so is the answer to that one.

1:02:12 Okay. So I think on that note, we'll draw the Q and A to a close. Any questions that we haven't picked off, apologies because we were going up and down quite a lot, we'll we'll make sure that we come back and and answer those questions accordingly post the post the presentation today. Thank you. Perfect, guys. If I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in for investors this afternoon. And, course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Mike, perhaps before just now looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great.

1:02:58 Yeah. So I think I'll just recap on our strategic focus as 2026, '27, and into 2028. You know, we have now completed the the very much the lion's share of the business transformation that we've embarked on over the last two years. And we've now got a scalable integrated platform that's that's very much in place. So this is now about getting that flywheel of growth, you know, driving improved operating leverage within the business, and, ultimately, making sure that we start to see the the the opportunity ahead of us as we've now brought the businesses together. Secondly, the focus on deleveraging is going to be at the top of mind for us as a leadership team. And thirdly, we will make sure that we stay very focused on extracting value from the four acquisitions that we've made, all very much in line with expectation.

1:03:51 But equally, we'll continue to look at new opportunities as we go forward. I would just say is that, you know, we are seeing current trading in line with full year expectations. At this point in time, you know, we're doing everything we can to stay very focused on delivering the numbers. We don't know what will happen as it relates to the Middle East situation, but I will just remind everybody that currently, we don't see a supply chain particular supply chain challenge to us at this point in time. We will deal with managing managing market market pricing accordingly and react to that in a in a sensible and measured way, and we're monitoring that situation very, very closely. But we remain confident currently in terms of our outlook and our performance.

1:04:40 Perfect. Mike Russell, thank you once again for updating investors, this morning. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback? On behalf of management team of FLOWTECH FLUIDPOWER PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.