RNS Item

CORRECTION:

The following announcement replaces the version issued at 7.00hrs (AVS 8599U).  Correction relates to the income statement 2015 cost of sales 2015.  No other changes have been made.

 

Issued on behalf of Flowtech Fluidpower PLC Date: Tuesday, 12 April 2016 Immediate Release

 

FLOWTECH FLUIDPOWER PLC ("Flowtech" or the "Group" or "Company") Final statement of results for the year ended 31 December 2015

 

"2015 and early 2016 has been an exciting period of positive development around the Group encompassing the launching of over 6,300 new products along with broadened categories, four important acquisitions, strategic structural refinements for improved operating efficiencies and new data processing resources - all of which support and enhance market leading customer service levels going forward."

 

FINANCIAL HIGHLIGHTS		2015	2014
·      19% GROWTH IN GROUP REVENUE*		£44.8m	£37.79m
·      65% UPLIFT IN GROUP OPERATING PROFIT*		£5.49m	£3.33m
·      EARNINGS PER SHARE*		9.85p	0.44p†
·      5% INCREASE IN DIVIDEND: Ø Half year paid Ø Proposed final dividend Ø Total for the year		1.75p 3.50p 5.25p	1.67p 3.33p 5.00p
·      STRONG CASH GENERATION		£7.25m	£3.5m
·      NET DEBT		£9.0m	£6.7m
·      ACQUISITIONS: Ø Two during the year forming a 'Power Motion Control' division Ø Post year end, two further acquisitions and the creation of the 'Process' division
·      There continues to be significant opportunity to achieve organic growth through a wide range of revenue enhancing development programmes linked to our focused acquisition strategy.

 

† Adjusted for the gain on settlement of debt (£29.0m) and calculated using the proforma weighted average share capital of 41,178,451, calculated on the basis that the shares issued at IPO had been in existence for the entire year

* All results relate to continuing operations

 

"The original strategy presented at IPO in 2014, was to deliver profitable growth while maintaining consistent high levels of service to our diverse customer base - this remains our core philosophy.  There continues to be significant opportunity to achieve organic growth through a wide range of revenue enhancing development programmes linked to our focused acquisition strategy."

"Our strategy has assisted us to further increase market penetration and positioning. In 2014 when we acquired Primary Fluid Power we were able to establish a firm footing in the distribution of technically advanced hydraulic components and power packs. During 2015, by adding Albroco and Nelson Hydraulics, we had the critical mass to form a 'Power Motion Control' division (PMC) thus giving us an overall advantage in the marketplace through the creation of an OEM-focused hydraulic specialist, backed by a strong technical offering, across a wide and varied customer base."

 

"Following the year end, we were very pleased to add Indequip in February and Hydravalve in March to our portfolio, the latter establishing a new "Process" division.  Both will remain commercially independent, but now as part of the Flowtech Group they will be able to take advantage of the wider product offer, technical backup and marketing resources available."

 

"When our 2015 results are coupled with the more challenging conditions experienced across the majority of industrial sectors, we believe they give further evidence of the resilience of our technical distribution model, both in underlying profitability and crucially in cash generation.  The past twelve months have seen us continue to develop our multi-channel strategy with four acquisitions expanding our product and infrastructure resources.  In addition we also have confidence that the ground work in identifying further targets, as well as building the team capable of successfully integrating them, will continue to bear fruit over 2016 and beyond. From the core Flowtechnology operation that we brought to market in 2014, we are now able to use each addition to our "family" of companies by exploiting the synergy gains achieved, both commercially and operationally, and this underpins everything that we do.  A live example of this is our Data Repository project.  We therefore enter our third year as a public company with expanding confidence about what the Group can achieve for its staff and shareholders."

 

Sean Fennon, CEO

Flowtech Fluidpower plc

 

Enquiries:
Flowtech Fluidpower plc Sean Fennon, Chief Executive Officer Bryce Brooks, Chief Financial Officer Tel: 44 (0) 1695 52796
AIM: symbol: FLO email: info@flowtechfluidpower.com website: www.flowtechfluidpower.com
Zeus Capital Limited (Nominated Adviser and Broker) Dominic King, Andrew Jones Tel: 44 (0) 203 829 5000
TooleyStreet Communications (IR and media relations) Fiona Tooley Tel: 44 (0) 7785 703523 or email: fiona@tooleystreet.com

 

Editors' note: Flowtech Fluidpower plc, founded as Flowtech in 1983, is the UK's leading specialist supplier of technical fluid power products with modern distribution facilities in the UK and Benelux.  It offers an unrivalled range of Original Equipment Manufacturer (OEM) and Exclusive Brand products to over 3,600 distributors and resellers. Its catalogue is recognised as the definitive source for fluid power products, containing approximately 52,000 individual product line and  is distributed to more than 85,000 industrial Maintenance, Repair and Overhaul end users (MRO).  Over 80% of product is stocked and if ordered by 10pm, can be delivered next day in the UK, providing 'best in industry' service offering.  The Group's headquarters and main distribution centre is in Skelmersdale, Lancashire with further distribution centres in the Netherlands and China. The Power Motion Control Division (PMC) has operations in Merseyside, Northern Ireland and the Republic of Ireland; in total the business employs 299 people.

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

 

INTRODUCTION BY THE CHAIRMAN, MALCOLM DIAMOND MBE

2015 and early 2016  has been an exciting period of positive development around the Group encompassing the launching of over 6,300 new products along with broadened categories, four important acquisitions, strategic structural refinements for improved operating efficiencies and new data processing resources - all of which support and enhance market leading customer service levels going forward.

 

The acquisition pipeline has been very active throughout the year, resulting in Albroco being bought at the end of May, and totally absorbed into Primary's Knowsley site, thus yielding earnings enhancing synergies. In early July, Nelson Hydraulics (Northern Ireland and Dublin) joined the Group, along with its 40 staff and Managing Director Mark Nelson.  These two additions when linked with Primary enabled the formation of a new specialist division "Power Motion Control" (PMC) which is now under the leadership of Nick Fossey who joined us on the 1 March 2016 from the Eaton Corporation.

 

In early September, a unique Master trading agreement was signed with the Hydraulics Group of the Eaton Corporation for the distribution of PMC products and the sole distribution of Eaton Winner hose, fittings and adaptors.  The Flowtech board consider this to be a significant marketing and service advantage within the sector with revenue flow through anticipated in the second half of 2016.

 

To underpin the Board's confidence the dynamic progress of the Group over the past year we committed to rewarding shareholders with a 5% increase in the dividend ahead of these results.  Although at the time of writing the negative macro-economic environment and Brexit focus could be constraining investor confidence, we remain very optimistic about the future development and progress of this business.

 

However, you can be assured that our management team's confidence in delivering growth mainly by driving consolidation in what is a fragmented market sector continues with unabated optimism, whilst we gratefully acknowledge the ongoing support and loyalty of our shareholders.

DIVIDEND

Subject to Shareholder approval at the Annual General Meeting which is to be held on 1 June 2016, the Directors are proposing a final dividend of 3.50p per share. This, together with the interim dividend of 1.75p (paid on 23 October 2015), brings the total for the year to 5.25p, which again matches the commitment made at the date of the IPO.  The outlook for further enhancement to dividend flow remains good and the Board would like to reiterate its view that the retention of a strong dividend policy is a foundation for the investment case in the Group.

 

SUMMARY OF 2015 RESULTS BY SEAN FENNON, CHIEF EXECUTIVE OFFICER & BRYCE BROOKS, CHIEF FINANCIAL OFFICER

The underlying* operating result can be summarised as follows:

 

Continuing operations Underlying operating result*	2015 £000	2014 £000	Change	%
Flowtechnology:
UK	7,169	6,899	270	3.9%
Benelux	402	497	(95)	(19.1)%
	7,571	7,396	175	2.4%
Power Motion Control	1,228	369	859	232.8%
Central costs	(1,931)	(1,619)	(312)	(19.3)%
Underlying operating result*	6,868	6,146	722	11.7%

 

*Excludes acquisition costs, amortisation of intangible assets, share-based payment costs, restructuring costs, and IPO costs. Underlying operating result is reconciled to statutory profit before tax in the notes attached.

 

As well as creating a strong platform for the long-term growth of the Group, the first full calendar year as a public company has seen satisfactory financial progress on several fronts including an 11.7% (2014: 15.4%) increase in underlying operating performance. However, as has been widely reported, broad industrial markets have experienced challenging environments during the middle to latter part of 2015, and this has dampened the short term growth aspirations of the core Flowtechnology operations, particularly in the UK. It is therefore pleasing to report that this division has again demonstrated its resilient nature with reported profits showing overall year-on-year growth. The reduced contribution from the much smaller Benelux operation is largely down to local investment in an expanded technical sales resource which will support the business over the medium to long term, and in the short term has helped to produce year-on-year sales growth on constant currency of 4%.  The cost base in this region can now support further significant growth in revenue, and in addition to organic growth the Group will focus on suitable "bolt on" acquisitions which should allow attractive synergy gains in due course.

 

As detailed in the above table, the main driver for growth over the year has been derived from the Group's investment in the newly established Power Motion Control division. After initial setbacks from the slowdown in offshore and oil and gas market expenditure, the combined Primary, Nelson Hydraulics, and Albroco operations have made considerable progress during the latter part of 2015. Nelson is currently operating under an "earn-out" arrangement and has produced a contribution to the Group of £365,000 in the second half of the year, which is in line with our original expectations.  The contribution from Primary and the merged Albroco business at operating level is £863,000, of which £580,000 has come in the second half-year and therefore represents a satisfactory refocusing of the business away from its previous weighting in the oil and gas sector.  

 

ACQUISTION AND RESTRUCTURING COSTS

The Group uses a wide array of high-quality professional advisers to work on our acquisition strategy and its implementation, complemented by in-house resources focusing on core commercial due diligence.  In addition, during the year we have implemented a significant investment in the necessary corporate procedures to ensure that any business we acquire is able to integrate quickly and efficiently into the Group's governance and accounting environment, thereby building an immediate reporting structure. The total cost for the year represents 3.8% of the total consideration paid for acquisitions and we believe represents a fair cost for transactions of this type.

 

Restructuring costs incurred during the year relate to sensible redundancy arrangements incurred as part of the ongoing operational integration between the two North West England based businesses, in addition to the costs related to the plc board restructuring in late 2015.

 

TAXATION

The tax charge for the year was £1.1 million (2014: £1.2m), with an effective tax rate of 20.5% and a blended tax rate based on the geographical regimes of 20.2%. As detailed in the attached notes, the Group incurred an adjustment to the current year tax charge of £76,000 which related to an over estimation of tax due in the prior year.

 

STATEMENT OF FINANCIAL POSITION AND CASH FLOW

The net debt position at the year-end was £9.0m (2014: £6.7m). Cash generated from operating activities before tax payments was £7.4m  (2014:£3.5m) providing ample dividend cover and ability to service contingent consideration, which clearly demonstrates the strong cash generative nature of the core business.

 

During the year the principal use of cash has been the investment in the Albroco and Nelson operations. Both have been funded by a mixture of day one cash, followed by deferred consideration contingent on the performance of both businesses over the two years immediately following their purchase. These two deals are both examples of where the Group will seek to ensure that our cash resources are used in a focused manner with regard to acquisition activities, and will always look to ensure that wherever possible the transference of risk from vendors has a suitable profile built over an extended period of time.

 

In addition, during the latter part of 2015, the Group has used its financial strength to take advantage of the current soft conditions in the Chinese manufacturing environment to procure advantageous pricing on some fast moving lines. Where sensible these will be used to both promote offensive market initiatives during 2016, as well as provide some defence should the current challenging environments in the UK distribution sector persist. In general the stock profile created across the Group leaves all our trading divisions well-placed for further organic expansion through to 2017 and beyond.

 

Core working capital requirements again remain at a satisfactory level with key trade debt risks well embraced by the use of our central services function. The total charge for bad and doubtful debt related issues of £62,000, representing 0.14% of turnover (2014: £84,000).

 

Cash resources for further organic and acquisitive growth have also been bolstered by the extension of core facilities with Barclays Bank plc. As well as our long-term loan facility, the Group now enjoys an enhanced revolving credit facility of £8m, with agreement for a further "accordion" facility of £7m should such resources be required. All are subject to achievable covenant requirements. This again leaves the business very well placed for the immediate future, and indicates the level of commitment provided to the Group by Barclays.

 

STRATEGY FOR GROWTH

The Group has a clear view of its growth objectives - to create a specialist fluid power organisation that remains focused on its core competencies whilst servicing the varied industrial and manufacturing sectors through its delivery of 'class leading' service and support.  Our long term growth model is based on both organic growth coupled with complementary acquisitions in a very fragmented marketplace. 

 

Strategic focus	Description	Highlights
Acquisition and integration	The strategy is to acquire complementary businesses operating in specific channels, highly focused, commercially independent operations delivering quality customer service at all times.   Integration projects are ongoing to streamline all processes across the Group to ensure every operation can minimise its administration burden and concentrate on delivering growth.	Acquisitions since flotation have brought substantial new skills, knowledge, access to new markets for fluid power components and capable management teams.     Finance and HR processes have been migrated to the Service Centre leaving local management free to focus on delivering their growth strategies.
People	People are one of our strongest assets and as well as recruiting new talent, we are keen to acquire companies who value the importance of their workforce and share our values of continuing strong traditions.   Investing in our management teams brings the benefits of improved retention and talent identification for succession planning.  We see training and development of employees as key to our strategy to achieving our overall goals.	Nelson was acquired with the majority of the senior team having over 25 years' service with the company.   The Primary in-house training programme was rolled out to all UK employees. UK managers benefited from NLP training to improve skills and capabilities.   Nick Fossey joined the Group from Eaton Corporation in March 2016 and has become the Group's first "Divisional Director" responsible for development of Power Motion Control division. Nick has gained an extensive knowledge of the hydraulics distribution sector internationally, particularly within Europe, which will be invaluable to the future development of our business model.
Products and sourcing	We aim to have a market position as a one-stop shop supplier of fluid power products. The ongoing expansion of ranges will see the Group capture a greater percentage of current customer spend and also open up new business opportunities in the wider market.    The business nurtures its relationships with its OEM suppliers whilst developing its complementary Exclusive Brands.	The acquisition of Albroco has given us an enhanced presence in the new product range of electro-mechanical control products.   Master trading agreement with the Hydraulics Group of the Eaton Corporation for the sole distribution of Eaton Winner hose, hose fitting and adaptors.   Expansion of our sourcing team based in Shanghai.
Supply chain	In the Flowtechnology segments we consistently achieve our service level targets of 99% orders delivered next day, this is underpinned by our strategy in products and sourcing and sound inventory management. We have built long term partnerships with our suppliers and quality logistics companies to enable us to provide the pace and responsiveness our customers demand.   Where acquisitions include distribution operations they will be integrated into the Flowtechnology segments to provide synergy savings for the benefit of all our stakeholders.	To ensure service levels are never compromised we have substantially improved the business continuity plan. In addition the Skelmersdale warehouse now has the capability to supply 60% of Benelux sales, next day, in the event of an emergency.       Reorganisation of assembly operations to create our 'Centre of Engineering Excellence' at Knowsley.
E-commerce and Business Intelligence	The Flowtechnology operation has always been innovative in its use of e-commerce and our website is fully integrated to our stock control systems. With 64% of Flowtechnology customers ordering online in the UK we are committed to continually improving the customer website and will be launching a new website in 2016.   Business intelligence initiatives create insight which enables us to improve our products, our inventory management and pricing strategies.	First in the industry to introduce a mobile App in 2015. This features basic mobile phone ordering plus bar code scanning and technical sheet downloads.   Global data repository project initiated.     Invested in creating data cubes linking warehouse and logistics data.
Brand positioning	Brand and the ability to maintain and build a reputation is critical to our long term development. For all future acquisitions, brand and reputation will be paramount with the intention to maintain any local company branding and build on its existing position. Product brand expansion continues to be a key strategy for the Group.	Acquisitions since flotation have strong brand names within their sectors and remain operationally independent under the original name and corporate branding.   Eight new Exclusive Brands were added to our portfolio, now twenty six brands in total.

 

SUMMARY

The year has seen a period of continued strong development with an uplift in revenue of 19% over the previous year, our first as a PLC, and a 65% improvement in operating profit.  At the same time, we can safely say that 2015 was a challenging year for all, with continued pressure being exerted on the industrial marketplace driven by the crisis in oil and gas markets and all its associated industries. In addition this has been linked to more volatile currency fluctuations between sterling and our main trading partners.

Therefore, the result achieved gives a clear indication of the resilience of our core activities, and we firmly believe represents a creditable outcome for the business as a whole.

The original strategy presented at IPO in 2014, was to deliver profitable growth while maintaining consistent high levels of service to our diverse customer base - this remains our core philosophy. Whilst our acquisition activity has been fruitful, there continues to be significant opportunity to achieve organic growth through a wide range of revenue enhancing development programmes linked to this focused acquisition strategy.

ACQUISITIONS

Our strategy has assisted us to further increase market penetration and positioning. In 2014 when we acquired Primary Fluid Power we were able to establish a firm footing in the distribution of technically advanced hydraulic components and power packs. During 2015, by adding Albroco and Nelson Hydraulics, we had the critical mass to form a 'Power Motion Control' division (PMC) thus giving us an overall advantage in the marketplace through the creation of an OEM-focused hydraulic specialist, backed by a strong technical offering, across a wide and varied customer base. The integration of Albroco and Nelson has been extremely smooth with the process beginning to deliver a series of synergies in addition to the new income streams brought into the Group.

As part of this development, we have now recruited Nick Fossey as Divisional Managing Director of the PMC division. Nick joined us from a senior position at Eaton Hydraulics, and he brings a wealth of knowledge and experience to the business, as well as a deep network of contacts across Europe, the Middle East and the USA.

Our linkage to Eaton Hydraulics has been further cemented through the signing in September 2015 of a master trade distributor agreement which creates a long term partnership for the supply of Eaton PMC products to the UK and Irish markets. In addition, Eaton has granted sole distribution rights for the Eaton Winner hose, fittings & adaptors to the Group in the UK. The agreement represents a huge opportunity for both companies to develop and deliver a sales growth strategy using our combined strengths of world class manufacturing and distribution.

Finally, following the year end, we were very pleased to add Indequip in February and Hydravalve in March to our portfolio, the latter establishing a new "Process" division.  Both will remain commercially independent, but now as part of the Flowtech Group they will be able to take advantage of the wider product offer, technical backup and marketing resources available.

MANAGING OUR INVENTORY AND PRODUCT

A fundamental part of the Group strategy revolves around how we manage inventory. This is not only in terms of the financial investment, but also the product set that is used across all of the trading units and subsequently effects how we are able to optimise the synergies these operations can achieve. In order to maximise these synergies, a major IT development project was instigated in mid-2015 with the aim of consolidating the Group's entire product set, allowing each autonomous business to reap the benefits of being part of a larger organisation without the need for wholesale system change. The use of leading edge web and data warehouse systems will allow this to be completed cost effectively and ensure that our substantial data resources in both range, graphics and pricing can be exploited seamlessly across the Group.

The creation of this "Global Data Repository" has been implemented to enable the Group to consolidate and optimise the product set across all trading units. This programme will feed the multi-trading platforms across the business units delivering major benefits both financial and operational. This will be of increasing value as we expand via acquisition allowing further benefit to be exploited.

PEOPLE

A further pleasing aspect of the year has been the development of our Operational Board which was established to promote information flow between the businesses and enable the Group to focus on key market, customer and supply chain initiatives. Initially the operations board included the plc executive directors, Mark Richardson from Flowtech Benelux and Stephen Merrie. Following Stephen Merrie's retirement from Primary, Paul McGrady has been promoted to allow an unbroken transition which has already created a strong start to 2016. Following the acquisition of Nelson, the Managing Director, Mark Nelson joined the Operational Board. Working with new Divisional Director, Nick Fossey, our PMC teams will be able to exploit the solid foundation created during the year and use the undoubted advantages created as part of a wider Group.  In Flowtechnology, John Farmer has also stepped up into the leadership role following many years in the sales and purchasing functions, and has brought a top to bottom understanding of our core operation.  Finally we are very pleased that Andy Newham Senior, who has successfully led the Hydravalve operation for many years, will join the Operational Board from May bringing with him over 30 years knowledge of the process industries which we believe will be invaluable as we develop this new division over the coming years.

 

The Board takes this opportunity to thank our other colleagues around the business for their continuous hard work, dedication and loyalty, which underpins both the high-level customer relationships and the Group's overall performance.

 

OUTLOOK

When our 2015 results are coupled with the more challenging conditions experienced across the majority of industrial sectors, we believe they give further evidence of the resilience of our technical distribution model, both in underlying profitability and crucially in cash generation.  The past twelve months have seen us continue to develop our multi-channel strategy with four acquisitions expanding our product and infrastructure resources.  In addition we also have confidence that the ground work in identifying further targets, as well as building the team capable of successfully integrating them, will continue to bear fruit over 2016 and beyond. From the core Flowtechnology operation that we brought to market in 2014, we are now able to use each addition to our "family" of companies by exploiting the marginal gains achieved, both commercially and operationally, and this underpins everything that we do.  A live example of this is our Data Repository project.  We therefore enter our third year as a public company with expanding confidence about what the Group can achieve for its staff and shareholders.

 

12 April, 2016

 

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

Consolidated income statement

	Note	2015 £000	2014 £000
Continuing operations
Revenue		44,848	37,791
Cost of sales		(29,503)	(24,615)
Gross profit		15,345	13,176
Distribution expenses		(2,245)	(2,034)
Administrative expenses before separately disclosed items:		(6,232)	(4,996)
- Acquisition costs		(299)	(206)
- Amortisation of acquired intangibles		(413)	(130)
- Share based payment costs		(342)	(148)
- Restructuring costs		(323)	(45)
- IPO costs		-	(2,292)
Total administrative expenses		(7,609)	(7,817)
Operating profit		5,491	3,325
Financial income	4	22	33
Financial expenses	4	(233)	(1,990)
Gain on settlement of debt		-	29,043
Net financing (costs)/income		(211)	27,086
Profit from continuing operations before tax		5,280	30,411
Taxation	5	(1,057)	(1,184)
Profit from continuing operations		4,223	29,227
Loss from discontinued operations, net of tax		(131)	(496)
Profit for the year attributable to the owners of the parent		4,092	28,731

 

Earnings per share	7
Basic earnings per share
Continuing operations		9.85p	114.42p
Discontinued operations		(0.31p)	(1.94p)
Basic earnings per share		9.54p	112.48p
Diluted earnings per share
Continuing operations		9.73p	112.86p
Discontinued operations		(0.30p)	(1.92p)
Diluted earnings per share		9.43p	110.94p

 

Consolidated statement of comprehensive income

	2015 £000	2014 £000
Profit for the year	4,092	28,731
Other comprehensive income/(expense) - items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations	85	(141)
Total comprehensive income for the year attributable to the owners of the parent	4,177	28,590

 

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

Consolidated Statement of financial position
	Note	2015	2014
Assets		£000	£000
Non-current assets
Goodwill		46,412	44,583
Other intangible assets		4,179	2,995
Property, plant and equipment		3,265	2,887
Total non-current assets		53,856	50,465
Current assets
Inventories		13,254	11,163
Trade and other receivables		10,367	9,529
Prepayments		316	270
Other financial assets		32	24
Cash and cash equivalents		1,841	1,979
Total current assets		25,810	22,965
Liabilities
Current liabilities
Interest-bearing loans and borrowings		5,986	2,973
Trade and other payables		6,625	5,415
Deferred and contingent consideration		1,250	1,603
Tax payable		758	881
Provisions		86	71
Other financial liabilities		15	27
Total current liabilities		14,720	10,970
Net current assets		11,090	11,995
Non-current liabilities
Interest-bearing loans and borrowings		4,874	5,716
Deferred and contingent consideration		898	-
Provisions		130	162
Deferred tax liabilities		901	676
Total non-current liabilities		6,803	6,554
Net assets		58,143	55,906
Equity directly attributable to owners of the parent
Share capital	10	21,539	21,414
Share premium		46,880	46,664
Share based payment reserve		380	148
Shares owned by the Employee Benefit Trust		(338)	-
Merger reserve		293	293
Merger relief reserve		2,086	2,086
Currency translation reserve		(93)	(178)
Retained losses		(12,604)	(14,521)
Total equity		58,143	55,906

 

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

 

Consolidated statement of changes in equity

 

	Share capital £000	Share premium £000	Share based payment 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 2014	50	-	-	-	293	-	(37)	(13,494)	(13,188)
Profit for the year	-	-	-	-	-	-	-	28,731	28,731
Other comprehensive loss	-	-	-	-	-	-	(141)	-	(141)
Total comprehensive (expense)/ income for the year	-	-	-	-	-	-	(141)	28,731	28,590
Transactions with owners
Issue of share capital	21,364	19,950	-	-	-	-	-	-	41,314
Share issue expenses	-	(2,329)	-	-	-	-	-	-	(2,329)
Merger relief arising on acquisition of subsidiary	-	-	-	-	-	2,086	-	-	2,086
Gain on settlement of debt capitalised as share premium on issue of ordinary shares	-	29,043	-	-	-	-	-	(29,043)	-
Share based payment charge	-	-	148	-	-		-	-	148
Equity dividends paid	-	-	-	-	-	-	-	(715)	(715)
Total transactions with owners	21,364	46,664	148	-	-	2,086	-	(29,758)	40,504
Balance at 1 January 2015	21,414	46,664	148	-	293	2,086	(178)	(14,521)	55,906
Profit for the year	-	-	-	-	-	-	-	4,092	4,092
Other comprehensive income	-	-	-	-	-	-	85	-	85
Total comprehensive income for the year	-	-	-	-	-	-	85	4,092	4,177
Transactions with owners
Issue of share capital	125	216	-	-	-	-	-	-	341
Shares purchased by the EBT	-	-	-	(338)	-	-	-	-	(338)
Share-based payment charge	-	-	342	-	-	-	-	-	342
Share options settled	-	-	(110)	-	-	-	-	-	(110)
Equity dividends paid	-	-	-	-	-	-	-	(2,175)	(2,175)
Total transactions with owners	125	216	232	(338)	-	-	-	(2,175)	(1,940)
Balance at 31 December 2015	21,539	46,880	380	(338)	293	2,086	(93)	(12,604)	58,143

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

 

Consolidated Statement of cash flows

 

	Note	2015 £000	2014 £000
Cash flow from operating activities
Net cash from operating activities	11	5,943	2,275
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired		(3,063)	(2,683)
Disposal of subsidiary, net of overdraft disposed of		-	103
Acquisition of property, plant and equipment		(750)	(496)
Proceeds from sale of property, plant and equipment		7	-
Payment of deferred consideration		(1,603)	-
Net cash used in investing activities		(5,409)	(3,076)
Cash flows from financing activities
Net proceeds from the issue of share capital		-	37,571
Proceeds from new loan		6,523	7,000
Repayment of long term borrowings		(2,357)	(37,532)
Net change in short term borrowings		(2,096)	(5,409)
Repayment of finance lease liabilities		(32)	(16)
Interest received		14	3
Interest paid		(244)	(341)
Purchase of own shares		(338)	-
Cash settled share options		(105)	-
Dividends paid		(2,175)	(715)
Net cash (used in)/generated from financing activities		(810)	561
Net change in cash and cash equivalents		(276)	(240)
Cash and cash equivalents at start of year		1,979	2,265
Exchange differences on cash and cash equivalents		22	(46)
Cash and cash equivalents at end of year		1,725	1,979

 

 

FLOWTECH FLUIDPOWER PLC

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

Final statement of results for the year ended 31 December 2015

NOTES TO THE PRELIMINARY STATEMENT

 

1.	ACCOUNTING POLICIES

 

BASIS OF PREPARATION

The final statement has been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and IFRIC interpretations issued by the International Accounting Standards Board and the Companies Act 2006.

 

The Group has applied all accounting standards and interpretations issued relevant to its operations for the year ended 31 December 2015. The consolidated financial statements have been prepared on a going concern basis.

 

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 434 and 435 of the Companies Act 2006. The financial information for the year ended 31 December 2015 has been extracted from the Group's financial statements upon which the auditor's opinion is unmodified and does not include any statement under section 498(2) or 498(3) of the Companies Act 2006.  The statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Annual General Meeting.

 

The consolidated financial information has been prepared on the basis of accounting policies set out in the Group's financial statements for 2015.

DISCONTINUED OPERATIONS

Discontinued operation costs relate to ongoing commitments for properties relating to operations disposed of in the year ended 31 December 2014. These costs were unforeseen at the time of disposal.

Any profit or loss arising from the sale of discontinued operations is presented as part of a single line item, 'profit or loss from discontinued operations'.

DERECOGNITION OF FINANCIAL LIABILITIES

The Group derecognises a financial liability (or its part) from the statement of financial position when, and only when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying amount of a financial liability (or a part of a financial liability) extinguished and the consideration paid, including any non‑cash assets transferred or liabilities assumed, is recognised in profit or loss.

GOING CONCERN

The Group meets it day-to-day working capital requirements through its bank facilities. The Directors have carefully considered the banking facilities and their future covenant compliance in light of the current and future cash flow forecasts and they believe that the Group are appropriately positioned to ensure the conditions of its funding will continue to be met and therefore enable the Group to continue in operational existence for the foreseeable future by meeting its liabilities as they fall due for payment.  As such, the Directors are satisfied that the Company and Group have adequate resources to continue to operate for the foreseeable future. For this reason they continue to adopt the going concern basis for preparing the financial statements.

 

2.  SEGMENTAL REPORTING

Segment information for the reporting periods is as follows:

	For the year ended 31 December 2015
	Flowtechnology		Power Motion Control	Inter-segmental transactions	Central Costs	Total continuing operations
	UK £000	Benelux £000	£000	£000	£000	£000
Income statement - continuing operations:
Revenue from external customers	29,439	3,729	11,680	-	-	44,848
Inter segment revenue	860	99	231	(1,190)	-	-
Total revenue	30,299	3,828	11,911	(1,190)	-	44,848
Underlying operating result	7,169	402	1,228	-	(1,931)	6,868
Net financing costs	(65)	-	3	-	(149)	(211)
Underlying segment result	7,104	402	1,231	-	(2,080)	6,657
Separately disclosed items (see note 3)	(144)	(22)	(505)	-	(706)	(1,377)
Profit/(loss) before tax	6,960	380	726	-	(2,786)	5,280
Specific disclosure items
Depreciation	389	23	93	-	-	505
Amortisation	-	-	413	-	-	413
Reconciliation of underlying operating result to operating profit:
Underlying operating result	7,169	402	1,228	-	(1,931)	6,868
Separately disclosed items (see note 3)	(144)	(22)	(505)	-	(706)	(1,377)
Operating profit/(loss)	7,025	380	723	-	(2,637)	5,491

 

	For the year ended 31 December 2014
	Flowtechnology		Power Motion Control	Inter-segmental transactions	Central Costs	Total continuing operations
	UK £000	Benelux £000	£000	£000	£000	£000
Income statement - continuing operations:
Revenue from external customers	30,052	3,800	3,939	-	-	37,791
Inter segment revenue	654	60	-	(714)	-	-
Total revenue	30,706	3,860	3,939	(714)	-	37,791
Underlying operating result	6,899	497	369	-	(1,619)	6,146
Net financing costs	(141)	(2)	-	-	(1,814)	(1,957)
Underlying segment result	6,758	495	369	-	(3,433)	4,189
Separately disclosed items (see note 3)	(166)	(30)	(135)	-	(2,490)	(2,821)
Gain on settlement of debt	-	-	-	-	29,043	29,043
Profit before tax	6,592	465	234	-	23,120	30,411
Specific disclosure items
Depreciation	424	40	39	-	-	503
Amortisation	-	-	130	-	-	130
Reconciliation of underlying operating result to operating profit:
Underlying operating result	6,899	497	369	-	(1,619)	6,146
Separately disclosed items (see note 3)	(166)	(30)	(135)	-	(2,490)	(2,821)
Operating profit/(loss)	6,733	467	234	-	(4,109)	3,325

The Group's revenues from external customers and its non-current assets (other than financial instruments and deferred tax assets) are divided into the following geographic areas:

	31 December 2014		31 December 2014		I January 2014
	Revenue	Non-current assets	Revenue	Non-current assets	Non-current assets
	£000	£000	£000	£000	£000
United Kingdom	36,329	52,326	30,636	49,537	43,306
Europe	7,760	1,530	6,958	928	947
Rest of world	759	-	197	-	-
Total	44,848	53,856	37,791	50,465	44,253

 

All revenue is derived from the sale of goods. No customers of the Group account for 10% or more of the Group's revenue for either of the years ended 31 December 2015 or 2014. Non-current assets are allocated based on their physical location. The above table does not include discontinued operations for which revenue and assets can be attributed to the UK.

Central costs relate to finance expenses associated with Group loans and separately disclosed items, (note 3) and the gain on settlement of debt.

3.  SEPARATELY DISCLOSED ITEMS
		2015 £000	2014 £000
Separately disclosed items within administration expenses:
- Acquisition costs		299	206
- Amortisation of acquired intangibles		413	130
- Share based payment costs		342	148
- Restructuring		323	45
- IPO costs		-	2,292
Total separately disclosed items		1,377	2,821

 

·      Acquisition costs relate to stamp duty, due diligence, legal fees and other professional costs incurred in the acquisition of Group subsidiaries

·      Share-based payment costs relate to the provision made in accordance with IFRS 2 "Share-based payment" following the exercise of share options issued to directors prior to admission to AIM

·      Restructuring costs relate to restructuring activities of both an operational and financial nature. Operational restructuring covers the closure of business units and the cost of applying Group operating polices to new units; costs include employee redundancies within these units, IT integration, continuing property costs post closure and other onerous lease obligations. The costs of financial restructuring includes bank arrangement fees and associated legal costs

·      IPO costs comprise the professional and other fees related to the IPO and costs of settlement of certain cash settled directors' share obligations arising on the IPO accounted for in accordance with IFRS 2 "Shared based payment".

 

4.  FINANCIAL INCOME AND EXPENSE
Finance income for the year consists of the following:
		2015 £000	2014 £000
Finance income arising from:
Interest income from cash and cash equivalents		4	2
Fair value gains on forward exchange contracts held for trading		18	31
Total finance income		22	33

 

Finance expenses for the year consist of the following:

		2015 £000	2014 £000
Finance expense arising from:
Interest on invoice discounting and stock loan facilities		36	126
Overdraft interest		-	1
Interest on revolving credit facility		41	-
Finance lease interest		3	3
Bank loans - current facilities		132	87
Other interest		21	14
Sub total		233	231
Finance expenses relating to pre IPO loans:
Shareholder loans		-	1,648
Other bank loans		-	111
Sub total		-	1,759
Total finance expense		233	1,990

 

5.  TAXATION
Recognised in the income statement	2015	2014
Continuing operations:	£000	£000
Current tax expense
Current year charge	1,231	1,058
Overseas tax	3	21
Adjustment in respect of prior periods	(76)	67
Current tax expense	1,158	1,146
Deferred tax
Origination and reversal of temporary differences	(97)	43
Adjustment in respect of prior periods	(11)	(7)
Change in tax rate	7	2
Deferred tax charge/(credit)	(101)	38
Total tax expense - continuing operations	1,057	1,184

 

	2014	2014
Discontinued operations:	£000	£000
Current tax expense	-	-
Deferred tax
Origination and reversal of temporary differences	-	8
Change in tax rate	-	-
Deferred tax expense	-	8
Total tax expense - discontinued operations	-	8
Total tax expense in the income statement	1,057	1,192

No income tax was recognised in other comprehensive income or directly in equity for either of the years ended 31 December 2015 or 2014.

Reconciliation of effective tax rate

	2015	2014
	£000	£000
Profit for the year	4,092	28,731
Total tax expense	1,057	1,192
Profit excluding taxation	5,149	29,923
Tax using the UK corporation tax rate of 21.50% (2014: 23.25%)	1,042	6,433
Deferred tax movements not recognised	37	12
Effect of tax rates in foreign jurisdictions	(4)	-
Other temporary differences	-	36
Impact of change in tax rate on deferred tax balances	1	2
Gains not chargeable	-	(6,244)
Amounts not deductible	68	886
Adjustment in respect of prior periods	(87)	67
Total tax expense	1,057	1,192

 

6.  DIVIDENDS	2014	2014
	£000	£000
Final dividend of 3.33p (2014: nil) per share	1,426	-
Interim dividend of 1.75p (2014: 1.67p) per share	749	715
Total dividends	2,175	715

 

The Directors are proposing a final dividend in respect of the financial year ended 31 December 2015 of 3.50p (2014: 3.33p) per share which will absorb an estimated £1.508 million of Shareholders' funds. This has not been accrued as it had not been approved at the year end. Subject to approval, it will be paid on 24 June 2016 to Shareholders who are on the register of members on 3 June 2016.

 

7.  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.

	Year ended 31 December 2015			Year ended 31 December 2014
	Earnings £000	Weighted average number of shares 000s	Earnings per share Pence	Earnings £000	Weighted average number of shares  000s	Earnings per share Pence
Basic earnings per share
Continuing operations	4,223	42,869	9.85	29,227	25,542	114.42
Discontinued operations	(131)	42,869	(0.30)	(496)	25,542	(1.94)
Basic earnings per share	4,092	42,869	9.55	28,731	25,542	112.48

 

Diluted earnings per share
Continuing operations	4,223	43,387	9.73	29,227	25,897	112.86
Discontinued operations	(131)	43,387	(0.30)	(496)	25,897	(1.92)
Diluted earnings per share	4,092	43,387	9.43	28,731	25,897	110.94

 

	2015 '000	2014 '000
Weighted average number of ordinary shares for basic and diluted earnings per share	42,869	25,542
Impact of share options	518	355
Weighted average number of ordinary shares for diluted earnings per share	43,387	25,897

 

8.  ACQUISITION OF ALBROCO LIMITED

On 29 May 2015, the Group acquired 100% of the share capital of Albroco Limited, a UK-based business, thereby obtaining control. The acquisition was made to enhance the Group's position in the hydraulic market. During July 2015 the trade and assets of Albroco Limited were transferred to Primary Fluid Power Limited, a fellow Group subsidiary and member of the Power Motion Control operating segment.

 

Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration, goodwill and intangible assets are as follows:

	Book value £000	Fair value adjustment £000	Intangible asset recognised on acquisition £000	Provisional fair value £000
Property, plant and equipment	20	(20)	-	-
Intangible assets	-	-	482	482
Inventories	414	(227)	-	187
Trade and other receivables	305	(2)	-	303
Cash and cash equivalents	434	-	-	434
Trade and other payables	(246)	5	-	(241)
Current tax balances	(53)	-	-	(53)
Provisions	-	(17)	-	(17)
Deferred tax liability	-	-	(96)	(96)
Total net assets	874	(261)	386	999

 

	£000
Fair value of consideration paid
Amount settled in cash	1,028
Fair value of contingent consideration	389
Total consideration	1,417
Less net assets acquired	(999)
Goodwill on acquisition	418

Fair values are provisional as subject to management estimations at the reporting date.

CONSIDERATION TRANSFERRED

Albroco Limited was acquired on 29 May 2015 for a total consideration of £1,497,000 comprising £1,028,000 in cash and £389,000 contingent cash consideration. The contingent consideration is due to be paid on 30 June 2016 and 30 June 2017 and is contingent on the gross profit of the Albroco customer base exceeding £400,000 in each of the twelve month periods ending 31 May 2016 and 31 May 2017. The maximum consideration payable is £2,000,000. The fair value of £389,000 has been estimated by management using a discount rate of 8.72% being the weighted average cost of capital of Albroco Limited and sales forecasts prepared by management at the time of acquisition, these have been reviewed for performance up to the reporting date.

Acquisition costs and stamp duty amounting to £55,000 have been recognised as an expense in the consolidated income statement as part of separately disclosed administration costs.

GOODWILL

Goodwill of £418,000 is primarily related to expected future profitability and expected cost synergies from the closure of the operational site and transfer of activities into existing Group locations. Goodwill has been allocated to the Power Motion Control operating segment and is not expected to be deductible for tax purposes.

 

INTANGIBLE ASSET

An intangible asset of £482,000 has been identified related to customer relationships. The estimated useful life has been determined as ten years based on the expected future cash flows that they would generate in arriving at their fair value. The customer relationships considered in the valuation comprise those purchasing control components, a product group which is new to the segment, but complimentary to existing sales streams. Sales growth over the ten year period has been assumed to be 1.5% with an attrition rate of 7.5% for customers. Growth and attrition rates are based on a review of sales and customer records. Amortisation of customer relationships is not expected to be deductible for tax purposes.

 

FAIR VALUE ADJUSTMENTS

·      The value of property, plant and equipment has been decreased by £20,000 to reflect the write down of assets acquired which were not put into use by the Group.

·      The value of inventories has been decreased by £227,000 to reflect the alignment of the Albroco Limited stock provisioning policy with that of the Group.

·      The value of debtors has been decreased by £2,000 to reflect the alignment of the Albroco Limited debtor provisioning policy with that of the Group.

·      The value of trade and other payables has been decreased by £5,000 to reflect the write back of various purchase ledger balances.

·      The value of provisions has been increased by £17,000 reflect the dilapidation costs relating to properties leased by the Company.

ALBROCO'S CONTRIBUTION TO THE GROUP RESULTS

Albroco Limited generated a profit after tax of £33,000 for the seven months from 29 May to the reporting date. If Albroco Limited had been acquired on the 1 January 2015, revenue for the Group would have been £45,516,000 and profit after tax for the year would have increased by £89,000.

 

Summary aggregated financial information on Albroco Limited for the period from 1 January 2015 to 29 May 2015, when it became a subsidiary:

	2015 £000
	£000
Revenues	668
Profit	89

 

9.  ACQUISITION OF NELSON FLUID POWER LIMITED

On 3 July 2015, the Group acquired 100% of the share capital of Nelson Fluid Power Limited ("NFP") and its subsidiaries, a UK-based business, thereby obtaining control. The acquisition was made to enhance the Group's position in the hydraulic market.

Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration, goodwill and intangible assets are as follows:

	Book value £000	Fair value adjustment £000	Intangible asset recognised on acquisition £000	Provisional fair value £000
Property, plant and equipment	179	(34)	-	145
Intangible assets	-	-	1,115	1,115
Inventories	1,314	(153)	-	1,161
Trade and other receivables	1,888	(37)	-	1,851
Cash and cash equivalents	2,183	-	-	2,183
Finance leases	(17)	-	-	(17)
Trade and other payables	(1,095)	-	-	(1,095)
Current tax balances	(80)	-	-	(80)
Provisions	-	(25)	-	(25)
Deferred tax liability	(7)	-	(223)	(223)
Total net assets	4,365	(249)	892	5,008

 

	£000
Fair value of consideration paid
Amount settled in cash	4,652
Assets retained as consideration	8
Fair value of contingent consideration	1,759
Total consideration	6,419
Less net assets acquired	(5,008)
Goodwill on acquisition	1,411

Fair values are provisional as subject to management estimations at the reporting date.

CONSIDERATION TRANSFERRED

Nelson Fluid Power Limited was acquired on 3 July 2015 for a total consideration of £6,419,000 comprising £4,660,000 in cash and assets and £1,759,000 contingent cash consideration. The contingent consideration is due to be paid on 31 July 2016 and 31 July 2017 and is contingent on the profits of the NFP group of companies exceeding £500,000 in each of the twelve month periods ending 30 June 2016 and 30 June 2017. The maximum consideration payable is £2,375,000. The fair value of £1,759,000 has been estimated by management using a discount rate of 8.64% being the weighted average cost of capital of NFP and sales forecasts prepared by management at the time of acquisition, these have been reviewed for performance up to the reporting date.

Acquisition costs and stamp duty amounting to £212,000 have been recognised as an expense in the consolidated income statement as part of separately disclosed administration costs.

GOODWILL

Goodwill of £1,411,000 is primarily related to expected future profitability, the substantial skill and expertise of its workforce and expected cost synergies from the combined buying power of the Group. Goodwill has been allocated to the Power Motion Control operating segment and is not expected to be deductible for tax purposes.

INTANGIBLE ASSET

An intangible asset of £1,115,000 has been identified related to customer relationships. The estimated useful life has been determined as ten years based on the expected future cash flows that they would generate in arriving at their fair value. The customer relationships considered in the valuation primarily comprise those in the crushing, screening, agricultural and fishing sectors which are new to the segment. Sales growth over the ten year period has been assumed to be 1.5% with an attrition rate of 2.7% for customers. Growth and attrition rates are based on a review of sales and customer records. Amortisation of customer relationships is not expected to be deductible for tax purposes.

FAIR VALUE ADJUSTMENTS

·      The value of property, plant and equipment has been decreased by £34,000 to reflect the write down of assets to their market value at the date of acquisition.

·      The value of inventories has been decreased by £153,000 to reflect the alignment of the NFP stock provisioning policy with that of the Group.

·      The value of debtors has been decreased by £37,000 to reflect the alignment of the NFP debtor provisioning policy with that of the Group.

·      The value of provisions has been increased by £25,000 reflect the dilapidation costs relating to properties leased by the Company.

NELSON FLUID POWER LIMITED CONTRIBUTION TO THE GROUP RESULTS

Nelson Fluid Power Limited generated a profit after tax of £264,000 for the six months from 3 July to the reporting date. If Nelson Fluid Power Limited had been acquired on the 1 January 2015, revenue for the Group would have been £48,508,000 and profit after tax for the year would have increased by £239,000.

Summary aggregated financial information on Nelson Fluid Power Limited for the period from 1 January 2015 to 3 July 2015, when it became a subsidiary:

	2015 £000
	£000
Revenues	3,660
Profit	239

 

10.  EQUITY

Share capital

The share capital of the Company consists only of fully paid ordinary shares with a nominal value of 50p per share. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at Shareholders' meetings of the Company.

	Number	£000
Allotted and fully paid ordinary shares of 50p each at 31 December 2015	43,078,282	21,539
Shares authorised for share based payments	6,666,667	3,333
Total shares authorised at 31 December 2015	49,744,949	24,872

 

	Number	£000
Allotted and fully paid ordinary shares of 50p each
At January 2015	42,828,283	21,414
Share issued in respect of loan to Employee Benefit Trust	249,999	125
At 31 December 2015	43,078,282	21,539

 

On 9 November 2015, 249,999 ordinary shares of 50p were issued and transferred to the Flowtech Fluidpower Employee Benefit Trust (EBT) under a loan agreement with the EBT.

 

11.  NET CASH FROM OPERATING ACTIVITIES 2014 £000 2014 £000
	2015	2014
Reconciliation of profit before taxation to net cash flows from operations
Profit from continuing operations before tax	5,280	30,411
Loss from discontinued operations before tax	(131)	(348)
Depreciation	505	503
Financial income	(22)	(33)
Financial expense	232	1,990
Gain on settlement of debt	-	(29,043)
Profit on sale of plant & equipment	(7)	-
Amortisation	413	130
Equity settled share-based payment charge	342	148
Operating cash inflow before changes in working capital and provisions	6,612	3,758
Change in trade and other receivables	1,628	408
Change in stocks	(688)	12
Change in trade and other payables	(136)	(752)
Change in provisions	(60)	62
Cash generated from operations	7,356	3,488
Tax paid	(1,413)	(1,213)
Net cash generated from operating activities	5,943	2,275

 

12.  POST BALANCE SHEET EVENTS

The trade and certain assets of the UK division of Indequip Limited were acquired on 19 February 2016 for a total cash consideration of £0.9m. The cash consideration was funded out of existing Group resources. Indequip has a complementary product range to the Group's existing pneumatics ranges and brings new customers to the Group. Significant savings are expected from the integration of the employees and operations into the Skelmersdale site.

Hydravalve (UK) Limited was acquired on 18 March 2016 for an initial consideration of £2.1m in cash with contingent consideration of £1.0m anticipated to be paid over the next two years. The cash consideration was funded out of existing Group resources. It is a specialist distributor of valves and associated equipment to the process industry based in Willenhall in the West Midlands. The business has a specialist customer base with in the process industry and will become the initial investment in a new "Process" division for the Group. Hydravalve will add significantly the Group's procurement position in valves.

 

13.  ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 1 June 2016 at 12noon at the Group's Registered office: Flowtech Fluidpower plc, Pimbo Road, Skelmersdale, WN8 9RB.

 

14.  ELECTRONIC COMMUNICATIONS

The full Financial Statements for the year ended 31 December 2015 is to be published on the Company's website, together with the Notice convening the Company's 2015 Annual General Meeting by 30 April 2016.  Copies will also be sent out to those shareholders who have elected to receive paper communications.  Copies can be requested by writing to The Company Secretary, Flowtech Fluidpower plc, Pimbo Road, Skelmersdale, Lancashire  WN8 9RB or email to info@flowtechfluidpower.com. 

 

FORWARD-LOOKING STATEMENTS

These Preliminary results were approved by the Board of Directors and authorised for issue on 12 April 2016.  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.