Preliminary results - year ended 31 December 2024

About this update from Flowtech Fluidpower Plc

    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:   2024 2023 Revenue   £107.3m £112.1m Operating loss -£25.2m -£10.4m Gross profit %   38.2% 36.8% Underlying EBITDA*   £5.9m £9.4m Underlying operating profit*   £2.7m £6.0m Net cash from operating activities   £8.7m £8.2m Net debt**   £15.1m £14.7m Final dividend   Nil 2.2p   In Year Highlights: Gross and Operating Margin Growth Levers Ø  Further focus on commercial discipline resulted in continued gross margin increase of 142bps to 38.2%.    Ø  Continued reduction in inventory levels by an underlying £3m, whilst maintaining 97% service availability demonstrating increased operational effectiveness. Ø  Direct and indirect procurement cost reduction of £1m as buying power across the Group scales up. Ø  Restructured to a simplified operating model which resulted in a further 2.2% year on year, like for like headcount reduction without limiting our future growth ambitions. Ø  High level of health & safety focus with Zero RIDDORs.   Sales Growth Levers Ø  Orderbook increased by 5.1% against December 2023 despite a more challenged external market. Sales pipeline quality and value materially improved during the year with a number of new contracts secured to underpin 2025 growth. Ø  High customer retention with like for like customer numbers remaining stable in a challenging market. Ø  A continued focus on customer service and operational improvements has resulted in further improvements in customer satisfaction measures. Ø  Increased website traffic resulted in online orders growing by 2% (FY23: 170.1K vs FY24: 173.6K) with the percentage of online orders now at over 70% of our product distribution channel (up 5% on FY23) and now up to 26% of total revenues. Ø  Creation and delivery of over 53,000 new and enhanced Flowtech catalogues to market.  Ø  Successful acquisition and integration of Thorite, the largest independent pneumatic distributor in the UK, adding new customers and seven new branch locations. Ø  Own brand range (FT PRO) saw sales outperform like for like product distribution sales by 7.7% and represented 16% of total sales (excluding Thorite) at the end 2024.   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 Ø  Trading headwinds have continued to persist into Q1'25 with expected market uncertainty to continue given the current Global trade wars. Ø Q1'25 trading has nevertheless been in line with our expectations following the work completed during 2024 to build a more stable and scalable platform for focused growth. Ø  Flowtech has over 70% of revenues concentrated in the UK with two thirds of sales serving opex led maintenance, repair and operations requirements and one third serving capex led original equipment manufacturing requirements.  The Group has limited exposure to automotive sectors. Ø  Our order book and sales pipeline remain strong, and we are concentrating efforts in higher growth sectors (i.e. defence, waterways & flood defence, data centres, construction & infrastructure and transportation). Ø We are launching the new E-commerce platform during Q2'25 which will serve as an important sales growth lever.   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.     FURTHER ENQUIRIES TO:   FLOWTECH FLUIDPOWER PLC Mike England, Chief Executive Officer  Russell Cash, Chief Financial Officer  Tel: +44 (0) 1695 52759   Email: [email protected]   Panmure Liberum ( Nominated Adviser and Joint Broker) Nicholas How, Managing Director, Head of Business Services and Industrials William King, Assistant Director, Investment Banking Tel: +44 (0) 20 3100 2000    Singer Capital Markets (Joint Broker)   Tom Salvesen, Head of Investment Banking  James Todd, Associate, Investment Banking  Tel: +44 (0) 207 496 3000     TooleyStreet Communications (IR and media relations)   Fiona Tooley  Tel: +44 (0) 7785 703523   Email: [email protected]        NOTES     *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 intangibles, impairment of goodwill, impairment of right of use assets, share based payments, and restructuring costs. The £3.2m differential between underlying profit and underlying EBITDA relates to depreciation charges.     **Net debt is bank debt less the value of cash and cash equivalents. It excludes lease liabilities under IFRS16. Bank debt is the value of the Barclays Revolving Credit Facility of £20m and any utilised value of the £5m overdraft facility, less cash and any unamortised value of loan arrangement fee.     2024 webcast presentations    The Company will be holding a live presentation via: Investor Meet Company on 9 April at 08:30am - Click here to register. and SparkLive on 9 April at 10:00am - Click here to register .   Annual General Meeting (AGM) The AGM will be held at 11:00am on 17 June 2025 at the Group's Headquarters, Flowtech Fluidpower plc, Bollin House, Bollin Walk, Wilmslow, SK9 1DP. The Notice convening the Company's 2025 Annual General Meeting shall be published on the Company's website and posted to shareholders who have elected to receive postal copies in due course.   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: [email protected]     FORWARD-LOOKING STATEMENTS This document contains certain forward-looking statements which reflect the knowledge and information available to the Company during the preparation and up to the publication of this document. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involving a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.       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:   ·      Completion of the rebranding of the business to one Flowtech and our own brand to FT Pro.   ·      The launch of the new Flowtech Value Proposition across all three regions.   ·      Building the new Digital Platform ready for launch during H1 2025.   ·      Acquisition and integration of the business and assets of Thorite, expanding our product range and geographical footprint in the UK.     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:   ​ ·      Further increased focus and leadership attention on the health, safety and wellbeing of our people, customers, suppliers and all other stakeholders. We have had zero RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) incidents and, due to improved reporting, have again increased near miss reporting by over 100%.   ·      Continued to focus on our gender diversity goals with 24% of our top 60 leaders now female.   ·      Our focus throughout 2024 has been on compliance with data recording, ensuring we have an accurate picture of carbon usage across our whole business. Whilst this does result in an increase in emissions reported, it does give us a robust baseline from which to measure future improvements.   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:   1. Customer growth   2. Commercial excellence   3. Product and service expansion   4. Own brand   5. Operating for less, and   6. Building talent and capabilities.   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.   1.    Customer First   Diverse customer base and omni-channel approach. We are well on plan in building the new digital platform and associated technology improvements; ready for testing in Q1 2025 and launch in Q2 2025. This includes a new, improved customer website interface, enhancement of core technology infrastructure with the successful implementation of a new technology integration layer, new customer data platform, new content management system underpinned by some big steps to improve our product information management capability and data quality. 2.   The Power of One Differentiated value proposition delivered through one team. We have completed the rebranding of the Company to 'One Flowtech' across all three regions embedding our purpose, vision and values. We have built and enhanced core Group capabilities in Procurement, Product Management, Communications & Marketing, Digital, Data, HR and Finance meaning that we bring standards and consistency in our processes, ways of working and are delivering greater efficiency gains.   One primary focus in 2024 has been to reset our relationships with our key strategic supplier partners. Now we are operating as one Flowtech with clarity of our value proposition and growth plans, we've seen far greater levels of understanding and engagement from our suppliers and have put in place refreshed growth plans.   We also brought together ten of our leading own brands into one single brand, FT Pro.  Offering an extensive range of high quality professionally engineered products, we launched FT Pro to market and began brand building and awareness to initiate greater levels of growth.  This is the start of a longer-term plan to grow and expand the FT Pro range.  We were encouraged to see growth in FT Pro at 7.7%, higher than the overall business and bucking the trend of the wider market.  FT Pro now represents 16% of total revenues and is higher margin. 3.             A World of Motion Expanding our products, services and geographical reach   The acquisition of the business and assets of Thorite in September brings market share gains and expands our brand, product and service offering in pneumatics, vacuum and compressed air. This combined with 1,000 collective years of relevant industry experience across colleagues in seven branches, expanding our technical capability and geographical footprint in the UK. The integration has been successful, and we are pleased to report performance ahead of plan with £4.5m of revenue over 4 months, acquired from administration and turned around from a £1m annual loss to making a positive profit contribution in the first 18 weeks of ownership and with full recovery of the debt and cash outlay.   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.   Our environment and becoming more sustainable Our focus throughout 2024 has been on compliance with data recording, ensuring we have an accurate picture of carbon usage across our whole business. Prior to 2024, the business operated as separate business units, so this work has been essential to standardise our approach.   In 2025 we will be launching our updated ESG strategy. Within that we will detail our targets to manage and reduce our environmental impact, along with the Key Performance Indicators we will use to assess progress against these targets.   Our culture, health, safety and wellbeing of our people Focus on further deployment of our Health & Safety improvement plans has resulted in increased reporting of near misses, demonstrating a step change in awareness and management attention and importantly, zero RIDDORs. At the end of 2024, we launch our new FLOW Safe programme.  A long-term awareness and improvement programme built around FLOW Safe - Feel Safe, Live Safe, Operate Safe and Work Safe.  This is gaining good momentum and keeping safety and wellbeing at the forefront of our people's minds.   We were proud during 2024 to initiate our partnership with CALM (Campaign Against Living Miserably) to raise funding towards suicide prevention and mental health causes.   Our governance and policies as we've now become One Flowtech Ensuring we have the right foundations in place to support our move to One Flowtech is vital. We have introduced a company-wide tiering system to ensure consistency and transparency across all roles across the organisation. We are also undertaking a full review of all our policies to ensure they support our updated ways of working.   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.   ​ 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:   2024 £m 2023 £m Change £m/% Group revenue   107.3 112.1 -4.3% Gross profit   41.0 41.3 -0.3 Gross profit %   38.2% 36.8% 142bps   Distribution expenses   (4.2) (4.5) 0.3 Administrative expenses before separately disclosed items (34.2) (30.7) -3.5 Underlying operating overheads   (38.4) (35.2) -3.2 Less Central costs     (6.0) (5.3) -0.7 Underlying segment operating overheads   (32.4) (30.0) -2.4   Underlying segment operating profit   8.7 11.4 -2.7   Underlying operating profit *   2.7 6.0 -3.13 Less separately disclosed items   (27.9) (16.4) -11.5 Operating loss   (25.2) (10.4) -14.8 Financing costs   (1.8) (1.7) -0.1 Loss before tax   (27.1) (12.1) -15.0 Tax   0.7 (0.9) 1.6 Loss after tax   (26.4) (13.0) -13.4   Underlying EBITDA*   5.9 9.4 -3.5 (*) 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 : Great Britain ("GB") Benelux Ireland 2024 audited 2023 audited Change 2024 audited 2023 audited Change 2024 audited 2023 audited Change Revenue (£m) 75.9 77.4 (1.5) 10.0 10.6 (0.6) 21.4 24.1 (2.7) Underlying operating profit (£m) 5.8 6.2 (0.4) 0.4 1.6 (1.2) 2.5 3.5 (1.0) Underlying operating margin 7.6% 8.0% 0.1% 3.6% 15.0% (11.0%) 11.8% 14.5% (2.8%) Underlying profit before tax (£m) 5.5 6.0 (0.5) 0.4 1.6 (1.2) 2.5 3.5 (1.0) 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%).   ·      After accounting for Thorite, GB revenue fell by £6.3m (8.1%) - There are significant plans now in place to support a return to the growth agenda as outlined in the CEO year in review section of this report. ·      In Ireland after a year of significant growth (11.9%) in 2023, revenue reduced by £2.7m (11.4%); this was primarily in the second half of the year and specific to a downturn in the activity within the crushing and screening sector. ·      In Benelux our revenue reduced by £0.6m (5.5%).    2024 saw the arrival of Francisco Terol to lead the Benelux business. Francisco has invested in his team, has identified a number of self-help areas to gain market share and is well set to capitalise when market conditions improve.   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:   2024 £000 2023 £000 Management salaries   2,376 2,271 Accounting & finance   939 935 Project & IT costs   1,132 723 PLC costs   572 589 Other central operating costs   1,021 784 Total 6,040 5,302   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 Separately disclosed items within administrative expenses:   2024 £000 2023 £000 Amortisation of acquired intangibles   820 906 Impairment of goodwill   25,070 13,026 Depreciation of old website  241 - Impairment of right of use assets   81 456 Impairment of intangible assets 284 Impairment of fixed assets 246 Negative goodwill  (2,205) - Share-based payment costs     729 462 Release of lease liability - property vacated in 2023   - (412) Acquisition costs  41 - Restructuring   2,581 1,918 Total separately disclosed items   27,888 16,356 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:  ·      Great Britain - £22,005,000 which relates entirely to the impairment of Goodwill. ·      Island of Ireland - NIL. ·      Benelux - £3,615,000 split £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.   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 t o £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: ·      Acquiring stock with a fair value of c£2.7m and settlement payments made to creditors to secure title were limited to £0.7m. This stock has/will turn relatively quickly so this represents material upside. ·      Through a mechanism agreed with the Administrator we achieved recoveries of approx. £2.2m from book debts. This represents £0.4m in excess of the £1.7m we paid to acquire this asset.   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   2024 £000   2023 £000  Continuing operations   Revenue  107,282  112,095  Cost of sales  (66,267)  (70,832)  Gross profit   41,015  41,263  Distribution expenses  (4,169)  (4,534)  Administrative expenses before separately disclosed items:  (34,196)  (30,740)  - Separately disclosed items  (27,888)  (16,356)  Total administrative expenses   (62,084)  (47,096)  Operating loss   (25,238)  (10,367)  Financial expenses  (1,839)  (1,735)  Loss from continuing operations before tax   (27,077)  (12,102)  Taxation  671 (875)  Loss from continuing operations   (26,406)  (12,977)  Loss for the year attributable to:   Owners of the parent  (26,406)  (12,977)  (26,406)  (12,977)  Earnings per share   Basic earnings per share - continuing operations   (42.23p)  (21.10p)    Consolidated Statement of Comprehensive Income  2024   £000   2023 £000    (Loss)/profit for the year   (26,406)  (12,977)    Other comprehensive income    Items that will be reclassified subsequently to profit or loss  - Exchange differences on translating foreign operations  (359)  (136)  Total comprehensive loss for the year  (26,765)  (13,113)  Total comprehensive loss for the year attributable to:  Owners of the parent  (26,765)  (13,113)  (26,765)  (13,113)    Consolidated Statement of Financial Position  2024 £000   2023  £000    Assets     Non-current assets     Goodwill  14,996  40,066    Other intangible assets  3,776 2,529    Right-of-use assets  4,806  4,829    Property, plant and equipment  7,546  7,822    Total non-current assets  31,124  55,246    Current assets   Inventories  29,263  32,009    Trade and other receivables  22,740  23,725    Prepayments  1,052 856    Cash and cash equivalents  1,839  5,184    Total current assets  54,894 61,774    Liabilities   Current liabilities   Lease liability  1,694  1,695   Trade and other payables  20,866  21,558   Tax payable  228  767    Total current liabilities  22,788  24,020   Net current assets   32,1 06 37,754   Non-current liabilities   Interest-bearing borrowings  16,913  19,915   Lease liability  3,743  3,822   Provisions 179  330   Deferred tax liabilities 791 1,534   Total non-current liabilities 21,626 25,601   Net assets 41,604 67,399   Equity directly attributable to owners of the Parent Share capital 31,637  30,746   Share premium 61,662  60,959   Other reserves 187  187   Shares owned by the Employee Benefit Trust (54)  (124)   Merger reserve 293  293   Merger relief reserve  3,646  3,646    Currency translation reserve  (336)  23    Retained losses  (55,431)  (28,331)    Total equity attributable to the owners of the Parent   41,604 67,399      Consolidated Statement of Changes in Equity  Share capital £000  Share  premium  £000  Other  reserve  £000  Shares  owned by the EBT   £000  Merger  reserve  £000  Merger  relief  reserve  £000  Currency translation  reserve  £000  Retained  losses  £000  Total  equity  £000  Balance at   1 January 2023   30,746  60,959  187  (124)  293  3,646  159  (14,527)  81,339  Loss for the year  -  -  -  -  -  -  -  (12,977)  (12,977)   Other comprehensive income  -  -  -  -  -  -  (136)  -  (136)   Total comprehensive income for the year   -  -  -  -  -  -  (136)  (12,977)  (13,113)  Transactions   with owners   Share-based payment charge  -    -    -    -    -    -    -    462    462    Dividends paid  -  -  -  -  -  -  -  (1,289)  (1,289)  Total transactions with owners   -  -  -  -  -  -  -  (827)  (827)  Balance at 31 December 2023   30,746  60,959  187  (124)  293  3,646  23  (28,331)  67,399    Balance at   1 January 2024   30,746  60,959  187  (124)  293  3,646  23  (28,331)  67,399  Loss for the year  -  -  -  -  -  -  -  (26,406)  (26,406)   Other comprehensive income  -  -  -  -  -  -  (359)  -  (359)   Total comprehensive income for the year   -  -  -  -  -  -  (359)  (26,406)  (26,775)  Transactions   with owners   Issue of share capital  891  703  -  (200)  -  -  -  -  1,394  Share options settled  -  -  -  270  -  -  -  (41)  229  Share-based payment charge  -    -    -    -    -    -    -    730    730    Dividends paid  -  -  -  -  -  -  -  (1,383)  (1,383)  Total transactions with owners   891  703  -  70  -  -  -  (695)  969  Balance at 31 December 2024   31,637  61,662  187  (54)  293  3,646  (336)  (55,431)  41,604    Consolidated Statement of Cash Flows 2024   £000   2023  £000    Cash flow from operating activities    Net cash from operating activities   8,706  8,202    Cash flow from investing activities     Payment for acquisition (832)   Repayment of Credit facility from acquisition (1,694)   Acquisition of property, plant and equipment  (1,547)  (2,092)    Acquisition of intangible assets   (1,764)  (121)    Proceeds from sale of property, plant and equipment  31  135    Net cash used in investing activities   (5,806)  (2,078)    Cash flows from financing activities   Net proceeds from issue of share capital  1,393    Repayment of lease liabilities  (1,663)  (1,818)    Repayment of bank loan  (3,000)  Interest on lease liabilities  (117)  (221)  Other interest    (1,725)  (1,567)    Proceeds from sale of shares held by the EBT  270  -    Dividends paid  (1,383)  (1,289)    Net cash used in financing activities   (6,225)  (4,895)  Net change in cash and cash equivalents   (3,325)  1,229  Cash and cash equivalents at start of year   5,184  3,972  Exchange differences on cash and cash equivalents   (20)  (17)  Cash and cash equivalents at end of year   1,839  5,184    Net Debt   15,074  14,731      Reconciliation of liabilities arising from financing activities   The changes in the Group's liabilities arising from financing activities can be classified as follows:  Long-term borrowings  £000  Short-term borrowings £000  Lease liabilities  £000  Total   £000   At 1 January 2023  -  19,967  6,713  26,680   Cash flows:   Repayment  -  -  (1,819)  (1,819)   Other movements  (52)  -  (52)   Non cash:   Additions  -  -  1,068  1,068   Disposals  -  -  (425)  (425)   Reclassification of liabilities  19,915  (19,915)  -  -   Other lease movements  -  -  -  -   Foreign exchange difference  -  -  (21)  (21)   At 31 December 2023   19,915  -  5,516  25,431     At 1 January 2024  19,915  -  5,516  25,431   Cash flows:   Repayment  (3,000)  -  (1,663)  (4,663)   Other movements  (2)  -  -  (2)   Non cash:   Additions  -  -  1,628  1,628   Disposals  -  -  -  -   Reclassification of liabilities  -  -  -  -   Other lease movements  -  -  -  -   Foreign exchange difference  -  -  (44)  (44)   At 31 December 2024   16,913  -  5,437  22,350     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: [email protected] .  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:   For the year ended 31 December 2024     Great Britain  £000  Benelux  £000      Ireland  £000  Inter-segmental transactions  £000  Central costs £000  Total continuing operations   £000   Income statement - continuing operations:   Revenue from external customers  75,913  9,999  21,370  -  -  107,282   Inter-segment revenue  4,541  378  469  (5,388)  -  -   Total revenue  80,454  10,377  21,839  (5,388)  -  107,282   Underlying operating result (*)   5,806  363  2,521  -  (6,040)  2,650   Net financing costs  (325)  (6)  (23)  -  (1,482)  (1,836)   Underlying segment result   5,481  357  2,498 -  (7,522)  814 Separately disclosed items  (21,715)  (3,823)  (218)  -  (2,133)  (27,888)   Profit/(loss) before tax   (16,234)  (3,466) 2,278  -  (9,655)  (27,077)   Specific disclosure items   Depreciation and impairment on owned plant, property and equipment  1,375  70  96  -  1  1,542   Depreciation on right of use assets  1,109  112  165  -  146  1,532   Accelerated depreciation of old website  241  -  -  -  -  241   Impairment of right of use assets  61  20  -  -  -  81 Negative goodwill  (2,205)  -  -  -  -  (2,205)   Impairment of goodwill  22,005  3,065  -  -  -  25,070   Impairment of intangible assets 284 284 Impairment of fixed assets  -  246  -  -  -  246   Amortisation  877 73  99  -  -  1,049 Reconciliation of underlying operating result    Underlying operating result (*)  5,806  363  2,521  -  (6,040)  2,650 Separately disclosed items  (21,715)  (3,823)  (218)  -  (2,133)  (27,888)   Operating (loss)/profit  (15,909)  (3,460)  2,303  -  (8,173)  (25,238)     ( *) Underlying operating result is continuing operations' operating profit before separately disclosed items detailed later in this note.  For the year ended 31 December 2023   (re-stated)   Great Britain  £000  Benelux  £000    Ireland  £000  Inter-segmental transactions  £000  Central costs  £000  Total continuing operations   £000   Income statement - continuing operations:   Revenue from external customers  77,371  10,583  24,141  -  -  112,095   Inter-segment revenue  3,141  652  585  (4,378)  -  -   Total revenue  80,512  11,235  24,726  (4,378)  -  112,095   Underlying operating result (*)   6,165  1,585  3,541  -  (5,302)  5,989   Net financing costs  (172)  (8)  (30)  -  (1,525)  (1,735)   Underlying segment result   5,993  1,577  3,511  -  (6,827)  4,254   Separately disclosed items  (13,925)  (98)  (588)  -  (1,745)  (16,356)   Profit/(loss) before tax   (7,933)  1,479  2,923  -  (8,571)  (12,102)   Specific disclosure items   Depreciation and impairment on owned plant, property and equipment  1,208  71  83  -  1  1,363   Depreciation on right of use assets  1,065  262  344  -  139  1,810   Impairment of right of use assets  -  -  456  -  -  456   Impairment of goodwill  13,026  -  -  -  -  13,026   Impairment of acquired intangibles  -  -  -  -  -  -   Amortisation  900  98  118  -  -  1,116   Reconciliation of underlying operating result    Underlying operating result (*)  6,165  1,585  3,541  -  (5,302)  5,989   Separately disclosed items  (13,925)  (98)  (588)  -  (1,745)  (16,356)   Operating (loss)/profit  (7,760)  1,487  2,953  -  (7,047)  (10,367)     ( *) Underlying operating result is continuing operations' operating profit before separately disclosed items detailed below.  2024   £000   2023  £000  Separately disclosed items   Separately disclosed items within administration expenses:  - Acquisition costs  41 - Amortisation of acquired intangibles  820  906  - Accelerated depreciation of old website  241  - Impairment of Fixed assets 246  -  - Impairment of intangible asset    284 - Impairment of goodwill 25,070  13,026  - Impairment of right of use asset  81 456  - Negative goodwill (2,205)  - Share-based payment costs  729  462  - Release of lease liability of property closed in FY23  -  (412)  - Restructuring  2,581  1,919  Total separately disclosed items   27,888 16,356    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. 31 December 2024   Sale of goods  £000  Contracts  £000  On-site services  £000  Total revenue  £000  Non-current assets  £000  United Kingdom  79,864 5,420 1,279  86,563  55,411  Europe  19,502  332  -  19,834  1,396  Rest of the World  885  -  -  885  -  Total   100,251 5,752 1,279  107,282  56,807    31 December 2023 Sale of goods £000 Contracts £000 On-site services £000 Total revenue £000 Non-current assets £000 United Kingdom 83,178 3,041 1,087 87,306 64,979 Europe 23,148 - - 23,148 3,749 Rest of the World 1,641 - - 1,641 - Total 107,967 3,041 1,087 112,095 68,728   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.   Contract balances 31 December 2024 £000 31 December 2023 £000 1 January 2023 £000 Trade receivables 1,061 946 1,216 Advances received for contract works - - 174 Deferred service revenue - - - Total contract liabilities 1,061 946 1,390   4. Operating loss/profit      The following items have been included in arriving at the operating loss/profit for continuing operations:    2024   £000   2023  £000  Depreciation of property, plant and equipment under right-of-use assets 1,532  1,810  Depreciation and impairment of tangible assets 1,788  1,363  Amortisation of intangible assets - website 241  210  Amortisation of intangible assets - customer relationships and brands   820 906  Impairment of intangible asset 284 Impairment of goodwill  25,070  13,026  Impairment of right of use asset 81  456  Impairment loss/(gain) on trade receivables and prepayments  10  10  (Profit) / Loss on foreign currency transactions  (151)  (9)  Repairs and maintenance expenditure on plant and equipment  16  292    Services provided by the Group's Auditor  2024   £000   2023 £000  Audit of the statutory consolidated and Company financial statements of   Flowtech Fluidpower plc  112  95  Amounts receivable by the Company's Auditor and its associates in respect of:   Audit of financial statements of subsidiaries of the Company  276 226    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  Continuing operations:   2024   £000   2023  £000  Current tax expense  UK Corporation tax  130  146  Overseas tax  93  292  Adjustment in respect of prior periods  47  184  Current tax expense   270  622  Deferred tax    Origination and reversal of temporary differences  (771)  49  Adjustment in respect of prior periods  (170)  217  Change in tax rate  -  (13)  Deferred tax (credit)/charge   (941) 253  Total tax (credit) / charge - continuing operations   (671)  875    Reconciliation of effective tax rate  2024   £000   2023  £000  Loss profit for the year  (26,406)  (12,977)  Total tax (expense)   671  (875)  Loss excluding taxation  (27,077)  (12,102)  Tax using the UK corporation tax rate of 25% (2023: 23.5%)  (6,778)  (2,846)  Impact of change in tax rate on deferred tax balances  -  1  Amounts not deductible  6,016  3,412  Adjustment in respect of prior periods  101  401  Other adjustments  140 37  Other tax reliefs and transfers  (150)  (130)  Total tax expense in the income statement - continuing operations   (671)  875    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.   Year ended 31 December 2024 Year ended 31 December 2023 Loss   after tax £000  Weighted average number of shares  Loss   per share Pence  Profit   after tax £000  Weighted average number of shares  Earnings   per share  Pence  Basic earnings per share   Continuing operations  (26,406)  62,526  (42.23p)  (12,977)  61,493  (21.10p)    2024   £000   2023  £000  Weighted average number of ordinary shares for basic and diluted earnings per share  62,526  61,493  Impact of share options  85  97  Weighted average number of ordinary shares for diluted earnings per share   62,441  61,590    7. Goodwill   2024   £000   2023  £000  Cost   Balance at 1 January  63,164  63,164  Balance at 31 December   63,164  63,164  Impairment    At 1 January  23,098  10,072  Impairment charge  25,070  13,026  At 31 December   48,168  23,098  Carrying amount at 31 December   14,996  40,066    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:    Geographical segment £000 audited Great Britain  Island of Ireland  Benelux 13,127 1,869 - Total   14,996   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: ·      Great Britain - £22,005,000 which relates entirely to Goodwill. ·      Island of Ireland - NIL. ·      Benelux - £3,615,000 split £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.   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     2024   £000   2023  £000  Reconciliation of (loss)/profit before taxation to net cash flows from operations   Loss from continuing operations before tax  (27,077)  (12,102)  Depreciation and impairment of property, plant and equipment 1,537  1,363  Depreciation on right-of-use assets (IFRS 16) 1,526  1,810  Impairment of right-of-use assets (IFRS 16) 82 456  Write off of right-of-use liability (IFRS 16)  -  (387)  Finance costs 1,839  1,737  Loss on sale of plant and equipment  -  1  Amortisation of intangible assets  1,289  1,116  Impairment of fixed assets  246  -  Impairment of intangible assets 284 Negative goodwill   (2,205)  Impairment of goodwill 25,070  13,026  Cash settled share options  (45)  -  Equity-settled share-based payment charge  729  462  Exchange differences on non-cash balances  (128)  (15)  Operating cash inflow before changes in working capital and provisions   3,147  7,467  Change in trade and other receivables  3,310  347  Change in stocks  4,864  (619)  Change in trade and other payables   (1,562)  2,086  Change in provisions  (239)  15  Cash generated from operations   9,520  9,296  Tax paid   (814)  (1,094)  Net cash generated/(used) from operating activities   8,706  8,202   

View stock analysis, news, and events for Flowtech Fluidpower Plc