Flowtech Fluidpower plc (LON:FLO) has issued the following unaudited Trading Update ahead of the Group’s preliminary results which are scheduled to be released during April 2021.
In line with the challenging market conditions experienced as a result of the COVID-19 pandemic, we expect to report 2020 revenue of £95.1m, a 15% reduction against a 2019 figure of £112.4m. The majority of this reduction was seen in our Components Division.
|Revenue for the year ended 31 December 2020|
|Total Group revenue for the period||95.1||112.4||-15%|
Prior to the first national lockdown in March 2020, and in particular the closure of certain customer sites, revenue was slightly ahead of our expectations. The impact of the pandemic resulted in April revenue being 41% down compared with April 2019 and Q2 33% down against Q2 2019. Since April, our revenues have recovered; H1 was 22% down and H2 8% down against comparative 2019 periods.
Data we obtain from the British Fluid Power Association (relating to the period up to November 2020) suggests we have achieved a modest increase in market share in 2020.
Net debt* at 31 December 2020 was £11.7m (comprising £10.8m net bank debt and £0.9m of COVID-19 related support from HMRC which will be repaid by end March 2021). This represents a £4.9m reduction compared with £16.6m at 31 December 2019.
Our continued focus on working capital management, combined with a small underlying profit **, has underpinned this result. The trend of cash generation is expected to continue into 2021.
We renewed our Banking facilities in November 2020 and now have continuing aggregate £25m facilities in place for a three-year period. The covenants have been adjusted to align with current trading conditions.
DELIVERING ON OPERATIONAL COST SAVINGS
Despite the difficulties presented by COVID-19 restrictions, we have completed all the cost reductions outlined in our 2020 half year report. However, the lockdown measures and working from home environments, combined with restrictions on travel, have meant it was not possible to progress with certain of the further identified cost reductions. We will complete the remaining areas in 2021.
The Group has continued to ensure that the health and wellbeing of all its stakeholders and, in particular, our employees remains paramount. Away from this the continued progress made with reducing underlying operating costs has ensured that financial performance has, in the circumstances we have faced, remained satisfactory and provides a good base for the future. However, it clearly remains difficult to forecast accurately given the ongoing impact of, and uncertainty caused by, COVID-19 and therefore we will continue to keep our dividend policy and re-instatement of formal earnings guidance under review and will comment further as soon as we feel it is prudent to do so.
Roger McDowell, Flowtech Fluidpower Non-Executive Chair commented:
“In what has proven to be an extremely difficult year the wellbeing of our staff and the protection of the business have been our two key priorities. I am pleased to report the senior management team, supported by everyone throughout Flowtech, have delivered on both counts. The continued focus on cash has put us in a healthier position to deal with the prevailing market conditions. Whilst not underestimating the difficulties, we are cautiously optimistic of improving performance in 2021.”
* Our reported Net debt figure does not take account of IFRS16 related debt – this has remained stable with no new significant lease commitments entered into. The reported figure comprises £10.8m net bank debt and £0.9m of COVID-19 related support from HMRC which will be repaid by end March 2021.
** Underlying profit is profit before tax and separately disclosed items which comprise costs relating to amortisation, restructuring, acquisition and share based payments.