Annual Report 2024
Annual Report and Accounts for the year end December 2024
Contents
Section 1 Strategic Report
Financial Highlights
2
In Year Highlights
3
Flowtech at a Glance
4
Chairman’s Statement
6
The Value We Bring
9
Our CEO Review
11
Our Strategic Plan
15
Our Six Growth Engines
17
Our Performance Improvement Plan
19
Environment, Social and Governance (ESG)
21
Section 2 Governance
Corporate Social Responsibility
28
Financial Review
32
Managing Our Risks
35
Our Board
39
Corporate Governance Report
41
Directors’ Remuneration Report
47
Directors’ Report
50
Section 3 Financial Statements
Independent Auditor’s Report
54
Financial Report
65
Glossary of Terms
109
Section 1
Strategic Report
2
Financial highlights
Revenue
£107.3M
(2023: £112.1m)
2024
Gross profit %
38.2%
(2023: 36.8%)
Underlying EBITDA*
£5.9M
(2023: £9.4m)
Underlying
operating profit*
£2.7M
(2023: £6.0m)
Operating loss
-£25.2M
(2023: -£10.4m)
Net cash from
operating activities
£8.7M
(2023: £8.2m)
Net debt**
£15.1M
(2023: £14.7m)
Final dividend
Nil
(2023: 2.2p)
* 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
operating 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 any unamortised
value of loan arrangement fee.
3
In year highlights
People, Talent
& Capability
Completion of a companywide, Organisational
Development plan, leading to a customer
focused new way of working, reducing
headcount, and increasing efficiency.
Significant changes to our top leader’s cohort,
some 60% of roles changed, introducing
increased skills and capabilities to scale.
Introduced our new H&S cultural focus
and values, FLOW (Feel, Live, Operate and
Work Safe), once again we can report Zero
RIDDORs (Reporting of Injuries, Diseases
and Dangerous Occurrences Regulations).
Operate for Less
Restructuring to a simplified operating model
results in a further 2.2% year on year, like for
like headcount reduction whilst mitigating
the required incremental investment
associated with increasing the quality of
our team and in building new capabilities to
support our future growth ambitions.
Own Brand
Own brand range (FT PRO) sales
outperformed like for like product
distribution sales by 7.7% and represented
16% of total sales (excluding Thorite) at the
end 2024.
Product & Service
Expansion
Successful acquisition and integration of
Thorite, the largest independent pneumatic
distributor in the UK, adding seven new
branch locations.
Direct access or appointment of all the
leading Pneumatic and Compressor brands.
Commercial
Excellence
Further focus on commercial discipline
resulted in continued gross margin increase
of 142bps.
Continued reduction in inventory levels by
an underlying £3m, whilst maintaining 97%
service availability demonstrating increased
operational effectiveness.
Direct and indirect procurement cost
reduction of £1m as we scale up the full
buying power across the Group.
Customer
Growth
High customer retention with like for like
customer numbers remaining stable in a
challenging market.
Continued customer service and
operational improvements resulted in
customer complaints reducing by a further
27% on top of the 50% reduction seen in
H2 23.
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.
Creation and delivery of over 53,000 new
Flowtech catalogues to market.
Orderbook increased by 5.1% against
December 23 despite weaker external
market. Sales pipeline quality and value
materially improved during the year with
a number of new contracts secured to
underpin 2025 growth.
4
As the largest provider of fluid power
products, services and solutions in the
UK, Ireland and Benelux, we have the
expertise needed to serve our customers.
Today, we are a strong market leader in
a highly fragmented £30bn European
market. We currently have access to
around 10% of this through our three
markets in the UK, Ireland and Benelux.
We have a clear strategy to accelerate
value creation for our stakeholders. We
are transforming our company and laid
some solid foundations in 2024 to ensure
we improve, grow and expand.
To keep industry
moving sustainably.
Our purpose
To be the Trusted Advisor
in a world of motion.
Our vision
We are one team
We work safely and sustainably
We are customer obsessed
We are proud of who we are and
what we do
Our values
Flowtech at a glance
4
5
Operating in
3 countries
and exporting
to over 30
more
10,725 active
customers
620
employees
2,300
suppliers
73,000
stocked
products
Flowtech at a glance
5
6
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, our like
for like revenue declined by 8.6%
as customers reduced volumes,
destocked, and delayed project
timelines. Whilst we outperformed the
overall market trend, a decline of 8.6%
reflects the tough trading conditions.
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 significant 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
forecasts 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
Chair’s statement
7
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 our 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. There are
more details on this on page 19.
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 the customer
and delivering strong business
performance whilst 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,
again covered in more detail on page
15. 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 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 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%. This is
reflective of improved reporting,
rather than an increase of incidents.
• 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.
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. We thank our investors for
their continued support.
We are also pleased to welcome
Singers as a Flowtech’s Joint Broker;
they came on board in September
2024 and issued an initiation paper
to market in January 2025. Panmure
Liberum remain as the Company’s
Chairman’s statement
8
Annual Report and Accounts for the year end December 2024
Roger McDowell
Chair
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 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 and I would
thank everyone for their invaluable
contribution.
I am also pleased with the progress
made in developing our Board with
a 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. We
believe we have a strong, stable,
and scalable platform for growth into
2025 and beyond.
As we look ahead to 2025, we
expect continued and challenging
external market conditions to persist
but remain cautiously optimistic. We
have completed the vast majority of
the Performance Improvement Plan
and business transformation, and the
Leadership Team are now focused
on delivering a sustained period of
stability 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.
9
We have built a strong brand reputation, knowledge and experience over more than 40 years
of servicing customers and are now the largest supplier of fluid power products, systems
and solutions across the UK, Ireland and Benelux. Thorite adds 174 years of expertise in the
specialist area of pneumatics, vacuum and compressed air, further enhancing our already
strong supplier brands, product and service offerings.
The value we bring
We operate across a broad range of vertical industry sectors through our Indirect and Direct sales channels.
These include:
Today, everything we do at Flowtech
is focused on keeping business
moving, whether that’s supplying a
product or designing and building a
complex engineered solution.
Our primary customers are
Distributors & Resellers, End
Users and Original Equipment
Manufacturers. Around two thirds of
our revenue is generated in serving
Maintenance, Repair and Operations
(MRO) customer needs and a
third serving Original Equipment
Manufacturers’ needs.
Our Value Proposition is categorised into three areas:
We are a high service
technical product
provider across power,
motion and control.
1
We design,
manufacture, repair
and overhaul assets.
2
We deliver major
engineering projects
and onsite solutions.
3
Transport,Shipping,
Marine & Air
Pharma Medical Devices
Utility, Waterways,
Infrastructure, Waste Energy
Process Oil & Gas
Petrochem Chemical
Aerospace & Defence
Automotive
Aggregates Construction
Mining
Agriculture
Food & Beverage
Packaging FMCG
Off Highway
Metals & Heavy
Engineering
Automation & Systems
10
Annual Report and Accounts for the year end December 2024
Our unique value proposition provides our customers with the essential technical products they need
combined with an unrivalled range of specialist engineered systems & solutions across the world of
power, motion and control.
Technical Products
Configurable Systems
Tailored Solutions
Solutions
• Hydraulic Components
• Pneumatic Components
• Process & Filtration
Equipment
• Pumps & Valves
• Instrumentation, Test
& Measurement
• Industrial and General
Maintenance
• Hydraulic Power Units
• Hydraulic Hose Assembly
• Lubrication Systems
• Customised Cylinders
• Fueling Technology
• Product Modification
• Inhouse design and
installation
• Custom-made Engineered
Solutions
• Filtration/Purification Systems
• Turnkey Hydraulic Systems
Services
• Product or Part Kitting
• Dispensing Solutions
• Test & Calibration
• Mechanical & Electrical Repair
Services
• Machining & Fabrication
Services
• Onsite Diagnostic,
Maintenance & Repair
Our own brand – FT Pro –
brings together the previous ten leading
brands that we had within the business
into one single brand leaders.
FT Pro offers an extensive range of
high quality, professionally engineered
products, designed to suit the unique
requirements of all industries. Our
products are designed by engineers
to be reliable and long-lasting, ensuring
your equipment operated smoothly
and reliably.
With FT Pro products, our customers
can be confident their applications
will run effectively, no matter how
demanding the conditions.
for the engineer
We add value for our customers by helping them with some of their biggest issues, including:
People Capabilities and Skills
– with a shortage of engineers in the
industry we can provide the technical
experience and expertise to help bridge
the gap.
Working capital efficiency
– with some £30m of inventory available
for same day dispatch, we are trusted by
our customers to manage the impacts of
inventory and product availability.
Increase uptime and yield
– impacts on costs, productivity and
throughput matter, we can help keep
operations moving with our high service
product distribution.
Product & Technical innovation
– working with the leading brands we
can support the latest industry and
sector innovations.
Safety and Sustainability
– with increased mandatory requirements
and the subsequent reputational risk, we
can support our customers to operate
safely and sustainably.
In doing so, we support our broad customer base,
serving their needs whether they are designing,
building, maintaining or improving industrial plant,
equipment and operations.
11
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 Purchasing Managers
Index (PMI) and British Fluid Power
Association reports citing more than
10% decline.
We took 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 the 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 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 become part of Flowtech in
August 2024. Thorite is a strong and
trusted UK brand for over 170 years
“Controlling the
controllables in a
difficult market whilst
building the solid,
stable and scalable
platform needed for
profitable growth”
Our CEO review
12
Annual Report and Accounts for the year end December 2024
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
taking us further into the world of
motion. Pleasingly, Thorite exceeded
expectations in Q4, and we have a
highly motivated and re-energised
team focussed on delivering growth.
Taking on board customer feedback,
we’ve focussed 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 have declined
by 8.6% in the year as the rate of
market related decline across all
three regions has outpaced 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 being 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
ending 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 on page 32.
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
13
Our CEO review
extremely 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 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 brilliant basics
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
have 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 was
just 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, bucking the trend
of the wider market. FT Pro now
represents 16% of total revenues.
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
14
Annual Report and Accounts for the year end December 2024
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 –
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 companywide
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 are complete, and
the successful integration 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 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.
Mike England
CEO
15
Our Strategic plan covers the period 2023 – 2026 to deliver mid-term
market growth and value creation. Despite the persistent market
headwinds, we remain determined to execute strongly on our plan.
Our approach is simple:
Customer
First
The Power
of One
A World
of Motion
We have a diverse customer base and omni-channel approach in a highly
fragmented market.
Customer First
Our customers’ needs are changing with
increased digitisation across products and
services. The need to operate machines and
operations more sustainably drives increased
adoption of electrification and also opens up
new opportunities such as one of industry’s
megatrends, hydrogen. There is increased
market consolidation happening and supply
chains becoming more regionalised meaning
strategic supplier partnerships are a critical
enabler to drive customer satisfaction. With a
shortage of skilled engineers in industry, this
increases the demand on suppliers to move up
the value chain to deliver complete systems and
solutions not only the supply of products.
We launched our new catalogue in April 2024.
Based on customer feedback, we returned to
a trusted format, with one catalogue covering
our full offer. This received incredibly positive
feedback from our customers. We’ve made
improvements to our existing web platform
which has resulted in increased traffic albeit
the customers continue to find the experience
challenging. Therefore, and importantly, we are
pleased to report that we are on track to launch
our new and improved web platform in H1 2025,
with much of the foundation work completed in
H2 2024. We’ve been working hard to improve
our service, and we see key operating metrics
trending in the right direction with customer
and fulfilment centre complaints down, product
availability up, sales force productivity up
and the order book building with a visible and
improved sales pipeline.
Our strategic plan
2023-2026
16
Annual Report and Accounts for the year end December 2024
The Power of One
Unlocking this potential is made possible by
simplifying the operating model under one
brand, Flowtech. In doing so, shifting from
a fragmented house of brands to a leveraged
and integrated branded house. This includes
rebranding over ten ‘own branded’ product
ranges into one, FT Pro, then to increase
brand building activity around a simple and
compelling customer value proposition.
In 2024 we completed the rebranding work
and now have a consistent approach, as one
Flowtech, across our organisation, including all
UK, Ireland and Benelux locations. Transitioning
from 10 cash generating units to 3. This has also
given us the opportunity to promote our full value
proposition, giving us the ability to upsell and
cross sell to our existing customers, as well as
introducing new customers to our wide-ranging
capabilities. As part of this work, we underwent
a wholesale restructure of the business to ensure
we were set up in the right way to deliver for our
customers. We completed a critical review of
all teams and roles to ensure we are operating
effectively and efficiently and setting ourselves
up to scale and grow in the future.
A World of Motion
The fluid power market is changing and we need
to evolve to meet our customers’ needs and
accelerate our commercial advantage. Expanding
our product and service offerings across
the wider power, motion and control sectors
increases our addressable market opportunity
in Europe from £10bn to more than £30bn,
helping us to increase customer penetration and
future proofing our business. Flowtech is well
positioned to create competitive advantage by
unlocking the full Group potential with a broad
technical product offering and engineering
service capability across our indirect distributor
network and our direct channels. This includes
a mature own brand product portfolio with the
opportunity to continue to expand and grow its
share. The mid-term opportunity is to expand
our product and service offering into the wider
‘World of Motion’ to better support our collective
customers and their evolving needs.
Whilst this is a longer-term element of our
strategy, in 2024 we successfully acquired
Thorite, a specialist in pneumatics and air
systems controls. The transition and integration
of the Thorite business has gone incredibly
well. We have right sized the business and
worked with the team to bring together the
Thorite operation with the core Flowtech
offering. This was a great opportunity for us
to further strengthen our pneumatics offer, as
well as adding seven UK branch locations to our
footprint. Overall, the acquisition has been very
successful and is now operating profitably.
We will deliver a differentiated value proposition, delivered under one brand, with a lean,
efficient operating model.
Expanding our products, services and geographical reach to increase
market penetration.
17
Our strategy is underpinned by our six growth engines. Our strategic
imperatives for 2024 were Commercial Excellence and Operate for Less.
Our six growth engines
6
Reminder of our plan Margin engines
EBITDA growth engines
Engine components
Margin
Growth
DEBT
Reduction
• Selling more things to existing customers
✓
• New customer acquisition
✓
• Introduce industry sector channel strategy
✓
• Buying BETTER and selling WELL
✓
• Improving receivable and payable days
✓
• Optimising inventory availability and stock turns
✓
• New product and brand expansion
✓
• Introduction of new services
✓
• Increase geographical reach
✓
• Increase share of customer wallet
✓
• Focused product range expansion
✓
• Focused industry channel growth
✓
• Increased distribution efficiency and productivity
✓
• Optimise throughput and manufacturing capacity
✓
✓
• Improved sustainability and environmental impact
✓
✓
• Increased overall employee engagement
✓
✓
• Improve diversity and build inclusive culture
✓
✓
• Health, safety and wellbeing of people first
✓
✓
Developing
1 Customer growth
2 Commercial excellence
3
Product and
service expansion
4 Own brand
5 Operate for less
6
People, talent and
capability
18
Annual Report and Accounts for the year end December 2024
We have made significant progress in our focus areas, this includes:
Commercial excellence
Optimising inventory and availability:
We have reduced stock value by £4m,
whilst maintaining 97% stock availability.
We have developed a robust sales pipeline
across our eight sales channels to ensure
we have visibility of upcoming opportunities
and a forum to discuss and evaluate these.
The value of the sales pipeline has increased
by over 100% in the past 12 months. This
has also given us the ability to work more
collaboratively across the business where
opportunities touch more than one team.
Operate for less
We have continued to optimise efficiency in our
fulfilment centre, with headcount down 23%
from January to December 2024 and despatch
lines by headcount up 7.5%
Key deliverables
Growth engines
2026
Steady state
• Continual improvement
• Offer expansion
• Systems upgrades
• Inorganic expansion
2025
Digital ramp up
• Selling effectiveness
• Own brand power up
• Offer expansion
• Inorganic opportunities
2024
One Flowtech
• Selling effectiveness
• Digital re-platform
• Data-integration
• Increase throughput
2023
Performance Plan
• New leadership
• Operating model
• Launch strategy
In 2024 we made good progress against our strategic roadmap. We are well on track in building the new Digital
Platform which will provide enhanced website and marketing capability across all three regions. In addition, we have
implemented a Data-Integration capability to create greater levels of cross-Group visibility with a single view of our
customers and inventory as examples. The Integration layer provides a lower cost connectivity and enablement
across our Enterprise-wide Systems. Market conditions did mean we had to rephase some of our planned activity.
1
2
3
4
5
6
1
2
3
4
5
6
1
2
3
4
5
6
1
2
3
4
5
6
Initiating
Developing
Advancing
Embedded
2024 strategic
imperatives
Market
Self help
Capex help
Margin
Our strategic roadmap
19
Delivering what we set out to do
In the summer of 2023, we set out our Performance Improvement
Plan to improve a number of areas of our business that required some
immediate attention and lay solid foundations to enable us to grow
and scale as we move forward. Our objective was to deliver a more
customer-centric, lean and scalable platform for growth.
Our Performance Improvement Plan is
underpinned by 3 key principles:
1
Simple
Introducing a new,
simple operating
model with a new
team releasing the full
potential of our people
and our capabilities.
2
Customer Centric
Decision making and
activities centred
around the customer
with a refreshed
growth focus.
3
Scalable
Re-focus on doing
the basics brilliantly
whilst improving our
operational technology
infrastructure to power
future growth.
Performance
improvement plan
20
Throughout 2024, we built on the progress
we made in the previous six months and have
been pleased with the results:
Tightly managed overheads with 2.2% like
for like headcount reduction in FY24. This
has served to partly offset investment
we have made to improve the quality
of capabilities and the infrastructure to
support our growth ambitions.
Focus on commercial excellence delivered
142bps of gross margin improvement.
Continued focus on working capital
management delivering £6.7m
improvement.
Underlying £3m reduction in inventory
with product availability remaining
stable at 97%.
Restructured sales and marketing,
new catalogue delivered and new web
platform on track for delivery in H1 2025.
Improved customer experience,
complaints down a further 27%.
Fulfilment centre efficiency gains, 8%
increase in operator capacity and 23%
headcount reduction
We have now achieved what we set out to with our Performance Improvement
Plan and focus in 2025 will be on progressing our strategic plan.
21
Environment, Social
and Governance (ESG)
Environmental
Carbon measurement
Our focus throughout 2024 has
been on expanding our data
collection, and aligning 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
join together and standardise our
approach, to include far more data
collection, providing one version of
the truth. We have also extensively
increased what we’re measuring, to
include all fuels including stationary,
mobile, and third party, all utilities,
waste, refrigerants, freight, travel,
hotels, and material usage. All
reported data is measured, or
captured via transfer receipts unlike
previous years, assuring increased
reliability and accuracy.
We have engaged Carbon
Responsible to support with our
data collection, target setting and
compliance. Each of our sites, has
been trained and educated on our
new approach and now has access
to a carbon portal, to enter live
information at a local level so as not
to rely on a central perspective.
Our new partnership and
reinvigorated approach to recording
Greenhouse Gases again provides
a consistent and solid baseline that
we can use to set out clear targets
as part of our ESG strategy.
22
Annual Report and Accounts for the year end December 2024
Intensity Metrics
FY24
FY23
% change from FY23
Revenue (£m)
107.3
111.9
-4.38%
FTE
550
488
12.70%
Carbon intensity per £100,000 (tCO2e/FTE)
4.07
2.75
47.88%
Carbon intensity per FTE (tCO2e/FTE)
7.93
6.31
25.66%
Scope 1&2 carbon intensity per £100,000 (tCO2e/£)
0.89
0.64
39.63%
Scope 1&2 carbon intensity per FTE (tCO2e/FTE)
1.74
1.41
23.40%
Intensity
Two intensity metrics have been calculated for our emissions, one based on full-time equivalent employees and
one on revenue. Intensity metrics are a useful way to assess changes in emissions within a growing company, as
whilst absolute emissions increase, the impact per chosen unit can reduce. Reporting intensity metrics are also a
requirement of UK SECR reporting. In comparison to FY2023, the FY2024 emissions per FTE have increased by
25.66% (from 6.31 to 7.93 tCO2e/FTE. The FY2024 emissions per £100,000 of revenue have increased by 47.88%
(from 2.75 to 4.07 tCO2e/£100,000 revenue); measured emissions have risen whilst revenue has decreased.
2024
2023
tCO2e
Kwh
tCO2e
Kwh
Scope 1 (gas consumption)
615
2,655,198
452
2,012,554
Scope 2 (electricity consumption)
341
1,526,459
232
995,551
Scope 3 (other direct emissions)
3,402
523,132
2,353
307,218
TOTAL
4,358
4,704,789
3,037
3,315,323
Carbon reporting
We have seen an increase in our emissions compared to FY23. With the exception of the addition of the seven
Thorite sites, we believe this can largely be attributed to an increase in disclosure in FY24 compared to FY23, as we
have improved and expanded our emissions data capture.
Overall, our Greenhouse Gas (GHG)
emissions increased in FY2024
by 41.53% compared to FY2023
(+1,279.14 tCOSe). It should be
noted that 81.74 tCO2e (6.39%) of
this increase is attributable to the
addition of seven Thorite locations
to the Group.
In total, Scope 1 emissions
increased by 36.01% (+162.94
tCO2e). 19.02 tCO2e (11.67% of
this increase) is attributable to
refrigerants, which were reported
for the first time in FY2024, and
which may fluctuate year-on-
year, and 27.20 tCO2e (16.69%)
is contributed by Thorite. Within
Scope 1, there was a 10.86% (+26.00
tCO2e) increase in stationary
fuels, of which, 7.72 tCO2e (30%)
is contributed by Thorite, and a
55.36% (+117.92 tCO2e) increase in
mobile fuels, of which, 19.48 tCO2e
(16.52%) is contributed by Thorite.
Remaining increases are attributable
to improved reporting within Scope
1, in particular for mobile fuels.
Scope 2 emissions increased by
29.25% (+77.28 tCO2e). Addition
of Thorite locations accounts
for 13.13% of this increase (10.15
tCO2e). Owned electric vehicle
emissions increased by 15.76
tCO2e, accounting for 20.39% of
the total Scope 2 increase, and
indicating the increase in Electric
Vehicles in Flowtech’s fleet.
The remaining increases can be
attributed to improved reporting of
electricity data across its locations
and increases in consumption.
Scope 3 emissions increased by
43.97% (+1,038.92 tCO2e). Thorite
locations contributed only 44.40
tCO2e (4.27%) to this total. Freight
contributed the largest portion of
the increase (28.99% of the Scope 3
increase, +301.16 tCO2e compared
to FY2023), followed by purchased
goods and services (25.96%,
+269.67 tCO2e), of which, 269.54
tCO2e (99.95%) is from material use
which was reported for the first time
in FY2024. 57.18% of the material
use emissions total (154.20 tCO2e)
is from metal use reported by PFS.
A further 41.08% (110.77 tCO2e)
is from combined paper, board
and plastics reported by Pimbo
Road. The third largest contributor
to the Scope 3 increase is waste
generated in operations (18.47%
of the increase, +191.85 tCO2e
compared to FY2023). The largest
contributors to waste emissions
are wood reported by Pimbo Road
(98.32 tCO2e, 38.06% of total
waste emissions), and commercial
and industrial waste reported by
Gloucester (83.57 tCO2e, 32.35%
of total waste emissions). Employee
commuting increased by 112.43
tCO2e in FY2024, accounting for
10.82% of the Scope 3 increase,
largely due to an increase in
reported average FTE. Business
travel increased by 103.06 tCO2e,
accounting for 9.92% of the Scope
3 increase. Lastly, Fuel and energy
related activities not included in
Scope 1 and 2 increased by 60.76
tCO2e, and is directly related to the
increase in reported fuel and energy
in Scopes 1 and 2.
Excluding the addition of Thorite
locations, the emissions increases
may be attributed to an increase
in disclosure in FY2024 relative
to FY2023, as we have improved
and expanded its emissions data
capture. It is expected that our
measured emissions will continue to
increase as it continues to expand
and improve its reporting.
2024 reported figures will now be
used as a Baseline, providing an
accurate reflection of current usage
and emissions.
23
Environment, social and Governance (ESG)
Social
Our People
Setting ourselves up in the right way
to support our people and deliver
our strategy.
*Annual average
**(1-leavers during 2023/average number of employees)
***Average number of years served by current employees
****Thorite colleagues account for 28 of this figure; at the year-end Thorite had 72 employees
but this figure reflects average headcount across the year.
Demographics
2024
2023
2022
Number of employees*
596****
582
595
Retention**
66
71%
72%
Length of service***
7.9 years
7.8 years
7.9 years
Employee statistics
Waste Management
At the beginning of 2024, we only
collated data for non-hazardous and
general waste recycling. By the end
of 2024, we now collect and report
on hazardous and WEEE (waste
electrical and electronic equipment)
as well, providing a complete picture
of our waste management. This
will be used as a baseline as we
set targets to further reduce waste
where we can, this will of course
include working with our supply
chain to reduce packaging.
Fleet Management
In 2024 we refreshed our approach
to fleet management, working with
a new fleet provider and build on
our green approach to cars and
commercial vehicles.
In 2024 our overall fleet, including
taxable cars and light commercial
vehicles, consisted of 155 vehicles.
54% of this fleet are either hybrid
or fully electric (2023: 53%). Of our
taxable fleet 81% of vehicles are
hybrid or fully electric (2023: 85%).
The reduction here is due to nine of
the 11 cars we inherited from Thorite
having internal combustion engines.
As these leases end, these cars
will be replaced with hybrid or fully
electric cars, in line with our policy.
Of the 17 new taxable cars added
to the fleet in 2024 100% of these
were hybrid or fully electric (2023:
100%). Our fleet management
provider advised that having an
environmentally conscious fleet
with over 50% being hybrid or
electric is leading the way towards
full carbon reduction.
Energy Usage
Organisations that qualify for ESOS
must carry out ESOS assessments
every 4 years. These assessments
are audits of the energy used
by their buildings, industrial
processes and transport. The
latest ESOS report captured energy
consumption for the calendar year
2022. The basis for the report is
multi-site Display Energy Certificate
Advisory Report surveys produced
by an external qualified assessor.
The analysis for 2022 showed a net
reduction in energy consumption of
652,327 kWh, compared with the
previous ESOS period.
Total energy consumption (2022):
3,605,620 kWh (down from
4,257,947 kWh in the previous
ESOS period).
• Breakdown:
• Buildings: 2,384,480 kWh
(1,311,047 kWh electricity,
1,078,178 kWh gas, adjusted for
renewables).
• Transport: 1,221,140 kWh
(company vehicles, private
mileage, and equipment fuel),
accounting for 35% of total
consumption.
Delivery efficiency
We continue to enforce a delivery
model focused on reporting and
reducing the overall emissions and
carbon footprint. Fedex remain
responsible for 80% of the outbound
logistics with a focus on customer
satisfaction, on time in full deliveries
and creating the most efficient
routing system.
Managing our climate-related risks
and opportunities
We have a clear process for
managing our risk profile, which
includes climate-related risks and
this is outlined on page 35. As part
of this process we identify, assess
and manage climate related risks
and opportunities.
Our principle climate-related risk
is a force majeure linked to climate
change that could cause serious
supply chain or economic impacts.
This is review annually and we
ensure we have the appropriate
mitigating actions in place (these
are detailed on page 39).
Our plans and ambitions
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.
24
Annual Report and Accounts for the year end December 2024
Health and safety
In 2024, we are pleased to report
we had zero RIDDOR (Reporting of
Injuries, Diseases and Dangerous
Occurrences Regulations) related
incidents. We introduced an updated
Near Miss process and we have
seen a significant increase in
Near Miss reporting. Preventative
action in the form of the near
miss reporting process enables all
employees to actively identify items
or circumstances that would, if left
unprocessed, have the potential to
cause harm, therefore removing the
risk whilst continually empowering all
employees to take an active role in
both their and their colleagues’ safety.
We are subject to regular independent
Health and Safety audits. Due to
the work we have done in 2024 we
have been able to reduce major
risks identified from audit by 86%.
Expert examination of the company’s
assets, locations, and working
practices promotes adherence to
current regulations and recognized
best practice standards through
identification and education.
Regularly identifying opportunities
to improve and imposing strict
remedial action guidance directs each
location and function to maintain
standards expected by law whilst
ensuring unbiased external validity.
This process works in conjunction
with the Group Health and Safety
team’s support to constantly drive a
cultural shift towards best practice in
maintaining the highest standards of
Health and safety.
Throughout the year we introduced
Health and Safety ‘cultural audits’ to
understand and evaluate the attitude
of our people to Health and Safety.
This is a critical part of our Health
and Safety plan, as it underpins how
our colleagues turn up for work each
day. Exterior validation was gained via
the undertaking of interviews guided
by the HSE maturity model aimed at
directing focus to the areas of the
business deemed as opportunities to
improve whilst capitalising on those
areas reported as ‘what we do well in’.
In line with this we introduce a simple
ethos to Health and Safety, that’s
easy for our colleagues to remember,
and links with our broader vision
and values. We called it FLOW Safe,
which stands for Feel Safe, Live Safe,
Operate Safe and Work Safe. Building
a culture grounded in sound Health
and Safety practices in everything
we do is critical for us and we will
continue to build on this in 2025.
• Positive outcome of 2x HSE
inspections.
• Improved On-Site Services risk
management and oversight.
• Tighter document control
of safety systems on clients
locations.
• Improved MPOS/Client
collaboration on safety.
• 50% Increase of KPI trackable
client visits by Group H&S.
• Stricter rules and regulations
behind misuse of alcohol and
drugs – behaviour not to be
tolerated.
Wellbeing
Supporting our colleagues is
something that we take seriously
and over the last few years we have
built a network of Mental Health
First Aiders across our business. We
currently have 25 Mental Health First
Aiders, up from 19 in 2023, and these
individuals are on hand to provide a
listening ear and signpost support
that is available, when someone is
going through a tough time. Each
first aider has completed training
with Mental Health First Aid England,
who teach practical skills to spot
potential signs triggers of mental
health concerns in colleagues. We
also had two people who completed
suicide prevention training.
Along with supporting our colleagues
mental wellbeing, we are always
looking at ways to support physical
wellbeing. In 2024 we introduce air
quality and noise assessments our at
engineering centres to monitor and
improve the environment that our
people are working in.
• Spirometry and lung function
examinations are performed by
an exterior medical professional
to monitor the affect of welding
and painting activities, and
to validate the increased DIP
slide testing process installed
safeguarding for employees that
are exposed to metal working
fluids within engineering
• Hearing function examinations
are undertaken on those deemed
at potential risk via noise
assessments performed within
the engineering
One Flowtech
Earlier in this report, we talked about
our transition to One Flowtech. This
had an impact on our people, as
we had to structure our business to
support our strategic goals.
Following an extensive Organisational
development programme, to
introduce our new ways of working,
we restructured our business so that
we had a functional matrix model,
supporting our country and regional
structures, across the UK, Ireland
and Benelux. Doing this enabled
us to identify areas of duplication
and subsequently streamlining
functional responsibilities and
ensuring everyone in the business
was in the right role. Alongside this
we introduced a new job architecture
that introduced role tiering, which
provides a clear and transparent
approach to role profiling. We created
a new company wide bonus scheme,
a first for Flowtech, and introduced
an annual pay review. In April 2024
we ensured that we paid above the
Real Living wage as a minimum rate
of pay. We also launched a new,
management self-service HR system
to ensure we have all of our employee
data in one place. This system is now
providing key people data analytics,
enabling us to manage our people
plans, our recruitment and our training
with key information, not previously
available to us.
25
Developing our people
The knowledge and expertise that
our people have differentiates us
from our competition, so developing
our people is critical. With that in
mind, in 2024, we have significantly
increased our training hours – 6,852
in 2024 compared to 863 in 2023.
This included technical training,
sales skills and sales leadership
training and a senior leadership
development programme.
NEBOSH and level 6 H&S Leadership
training has also been undertaken
by members of the Group Health
& Safety team, along with a large
volume of First Aid, Fire Safety, skill
specific awareness and competency
training across the company.
Focus on Technical Training
In 2024, we prioritised technical
training across the organisation,
with revamped course content
delivered in three key areas:
1. Catalogue Training
Delegates gained in-depth
knowledge of our product
catalogue, including how to
navigate its sections, understand
each area, and effectively use
the indexes.
2. Product Training
Comprehensive training was
provided on individual products,
covering both supplier offerings
and our own-brand products.
3. Technical Training
Sessions covered essential
topics such as basic hydraulics,
pneumatics, air preparation, and
pneumatic symbols.
Our internal trainer achieved
accreditation to deliver the BFPA
Level 1 Pneumatics course,
positioning us as an accredited
provider of this recognised training.
Beyond upskilling our employees,
we extended these training sessions
to some of our distributors.
We also expanded training in
other areas, particularly in IT, with
targeted Excel and Power BI training
to enhance digital capabilities
across the business. The blended
delivery model, combining
classroom sessions with online
learning, has enabled teams from
various locations to participate and
develop their skills effectively.
These initiatives reflect our
commitment to continuous
improvement and equipping both
colleagues and partners with the
technical expertise needed to excel
in a dynamic market.
Powering up our Sales Team
We partnered with Discovery
ADR to conduct a comprehensive
assessment of our Sales team’s
skills and capabilities through a
series of talent centres. These
centres engaged teams in various
scenarios, including individual
and group activities, to evaluate
behaviours and responses to
different challenges.
Following these assessments, we
introduced three targeted training
programmes: Critical Sales Skills,
Building Commercial Acumen, and
the Sales Leadership Development
Programme. Initially, these initiatives
were implemented with our UK
teams. Due to their success, the
talent centres were extended to
our Irish teams, and a cohort of
delegates from Ireland is now
participating in the Sales Leadership
Development Programme.
The primary goal of these
programmes is to equip our Sales
teams with the skills and behaviours
required to operate as a high-
performing unit. To complement
this, additional training was also
provided to our Customer Service
teams, focusing on enhancing their
skills and behaviours to deliver
exceptional service.
These initiatives reflect our
commitment to continuous
professional development, ensuring
our teams remain competitive and
capable of driving sustained growth
and success.
Building a high-performing
leadership team
We partnered with Defy
Expectations to train and coach
our leadership team with the goal
of creating a high-performing,
customer-centric organisation.
Recognising that some leaders
were new to the company or new
to the role, we needed to build a
unified leadership team equipped
to navigate the challenges and
opportunities ahead.
We also introduced go to support for
our leaders that was easy to access
and covered areas that new leaders
would particularly need, this was
called “Leadership Mastered”
A distributor from Lockwells
noted, “The training was very
informative and I believe it
will help us better understand
the enquiries for pneumatics
and hydraulics that we
receive daily.”
26
Annual Report and Accounts for the year end December 2024
Apprenticeship Levy
During 2024 we have
paid £89,314 into the
Apprenticeship Levy
account and have spent £93,395
this has resulted in us not incurring
any expired levy. At the end of 2024
we had a levy pot of £113,703.
In May Flowtech was accepted as
a member of the 5% Club showing
our commitment to early careers.
By joining the 5% Club, we aspire
to achieve 5% of our workforce in
earn and learn positions, including
apprenticeships, sponsored
students, graduates, placements and
formalised trainee schemes.
The 5% Club is a dynamic movement
of employers committed to earn
& learn as part of building and
developing the workforce they
need as part of a socially mobile,
prosperous and cohesive nation. The
Club exists to help its members and
all employers increase further the
number, quality and range of earn &
learn opportunities across the UK.
Our communities
In 2024, we
partnered with
CALM (Campaign
Against Living Miserably), a charity
that offers support, advice and
information to people who are
struggling with mental health issues
or suicidal thoughts. We raised
just under £10,000 at our Summer
Extravaganza event last June and will
continue to focus on this important
area in 2025. We have a network
of charity champions, a group of
volunteers from each site who have
signed up to support our fundraising
efforts.
As well as our support for CALM,
colleagues in the business have
also taken part in Macmillan Coffee
Morning, Save the Children’s
Christmas Jumper Day, and our
walking group took part in some
sponsored walks.
Governance
Compliance & Risk Management
To ensure compliance with our
updated recruitment policy we
introduced a new recruitment gateway
and approvals process, giving us
consistency and visibility of our
recruitment activity.
We launched a new Whistleblowing
policy and process. Internally we refer
to this as ‘Speak Up’ and it provides
our colleagues with mechanism
to report potential wrongdoing,
malpractice or danger within the
business. We want a transparent
culture, where our colleagues feel
supported and safe at work, and this is
one element of that.
In 2024 we began a wholesale review
of our policies to ensure they are
still fit for purpose. So far we have
relaunched our expenses policy, our
disciplinary and grievance policy and
our dress code and uniform policy.
We will continue this work in 2025.
We launched our Health and Safety
policy for our Irish and Benelux
businesses, using our UK policy as a
starting point and taking into account
local legislation.
2024 saw central Health & Safety
facilitate the accreditation to both Safe
Contractor and Silver Constructionline
(Durham), streamlining our ability to
perform works to a wider remit.
We published our new modern
slavery statement, demonstrating our
commitment to preventing modern
slavery and human trafficking within
our operations and
supply chains.
In 2025 we will
launch our Code of
Conduct to further
enhance our One Flowtech culture,
approach, and ways of working. Our
aim it to outline our approach to key
aspects of work-life, highlighting areas
where high levels of vigilance are
required, such as cyber security, and
guiding our colleagues to understand
how we all want to work together and
uphold our values and behaviours.
Our full Risk Register is available on
page 39 of this report.
Apprenticeships
We have maintained our apprenticeship
programme throughout 2024, with
seven new apprenticeships started
throughout the year in a variety of
disciplines, including engineering,
customer services and finance.
2024
2023
2022
Apprenticeships started
7
16
18
Apprenticeships completed
7
2
1
Apprenticeships funded (ongoing)
20
25
23
Section 2
Governance
28
Stakeholder engagement
and Section 172 Statement
In accordance with Section 172 of the
Companies Act 2006 (S172) the Directors,
collectively and individually, confirm that during
the year ended 31 December 2024, they have
acted in good faith and have upheld their duty
to promote the success of the Company to the
benefit of its members, with consideration to its
wider stakeholders.
We are aware of the potential
impact that our decisions have
on all our stakeholders and take a
balanced approach to safeguard
their respective interests. We
recognise and respect issues which
are important to our stakeholders,
including our colleagues, customers
and suppliers, as well as our
shareholders. Our reputation is of
paramount importance to us and we
always seek to ensure that whatever
decisions we take, we do so by
maintaining suitable high ethical
mindsets, always seeking to treat all
our stakeholders with respect and
in the same manner we would like to
be treated ourselves.
The Board ensures there is always
an appropriate balance between
the impact any key decision may
have on the short as well as the
medium- to long-term. It also
recognises that certain decisions
may be more aligned to the interests
of one category of stakeholder over
another and this is always taken
account of when debating options
and ultimately making decisions.
The Board is committed to effective
engagement with all stakeholders
and takes steps to ensure this
mindset is filtered down throughout
the business. Whilst our business
model delegates certain day to
day operational decisions to local
management, we encourage
all involved to adopt the same
behaviours by which the PLC Board
is measured in their day-to-day
activities. We have a “balanced
scorecard” approach to our reward
scheme which is designed to flex
reward based on a number of
behaviours, including those captured
within the spirit of the s172 legislation.
Section 172 describes a diverse
range of stakeholders whose
interests are said to feature in
the ‘success of the Company’;
comments on each of these areas
are provided below:
Colleagues
Our people make our business what
it is, and we value the contributions
made by everyone that works with
us. We continue to invest in the
training and career development of
our colleagues and are committed to
providing a positive environment for
our colleagues.
We continue to invest on improving
support for mental health to our
employees, with a team of mental
health first aiders and Employee
Assistance Program provided by
unum available to all colleagues. We
ensure that each of our sites has at
least one trained individual whose
role is to be alert to any issues
which any of our colleagues may be
experiencing. We are proud of the
fact that our work in this area began
some years ago and that it is an
area we continue to focus on.
Of course, on occasion, decisions
necessarily have to be taken which
adversely impact on employees; in
such scenarios we are careful to
provide the necessary degree of
compassion with the processes we
adopt without removing the focus
to deliver the commercial benefit for
the greater good of the business.
Through our flexible approach,
our Group colleagues are driven
towards finding solutions which
Corporate social
responsibility
29
create efficiencies for ourselves but,
more importantly, our customers.
This requires extensive knowledge,
creativity and collaboration with
customers and suppliers. The Board
always aims to act fairly towards
colleagues, further information
outlining our approach to recruitment,
development and diversity can be
found elsewhere in this report.
Trasie Marsh, our HR Director, is a
member of our Executive Leadership
Team which sits immediately below
the PLC Board. As such all issues are
regularly tabled at these meetings
and, if necessary, escalated to
the PLC Board agenda. Trasie has
presented to the PLC Board on a
number of occasions, each time
highlighting the most important
aspects of our people agenda.
In 2024 we continued to build
on our Learning & Development
approach. Notable success stories
have included:
• The rollout of our sales training
to further upskill our sales teams,
bringing a consistent and joined up
approach to what we do and how
we do it.
• We invested further in our
apprenticeship programme
– we currently have 20
apprentices being supported
to develop their skills and
experience within the workplace,
whilst pursuing a qualification.
Suppliers
We work closely with our key
suppliers, developing strong
mutually beneficial partnerships.
Suppliers are keen for their products
to be distributed via a professional
distribution channel and for their
brand/reputation to be protected
when doing so. We are naturally
keen to ensure that all suppliers we
choose to partner with share the
same business ethos that we strive
to consistently deliver throughout
our own business.
Issues associated with supplier
relations are discussed, when
necessary, at Board meetings and
our Group Leadership Team includes
representation from Supply Chain
and Logistics team. On occasions
presentations are delivered to
the Board to provide up to date
commentary and to enable any
issues to be discussed, debated
and, if necessary, addressed.
Customers
Our customers are at the heart of
our business. We aim to provide a
great value, quality service to all
customers, ensuring we deliver end-
to-end fluid power solutions from a
single source.
We are a member of a number of
trade bodies in the fluid power
industry, including the British Fluid
Power Association (BFPA) and the
British Fluid Power Distributors
Association (BFPDA). We work
closely with these organisations and
invest in them with representation
from the Group at their various
gatherings throughout the year.
A number of our senior colleagues
have held positions on the BFPDA
Board and associated committees.
Environment and
Communities
We are committed to acting
responsibly and our respect for
both the environment and our
communities goes hand in hand
with commercial success. The
Group remains committed to
providing a safe and healthy working
environment and makes efforts
which reduce the Group’s overall
impact on the environment. Through
sharing ideas and resources, every
year we find new ways to reduce our
impact on the environment. Many of
our businesses also proudly support
industrial users who are increasingly
implementing more stringent
environmental practices and seeking
hydraulic and pneumatic solutions
to facilitate this. Further information
can be found within the sustainability
section of this report. The Group
is mindful of the responsibilities it
has to respect the local, national
and global climate related agenda;
from a business perspective it also
recognises the associated risks and
seeks to put in place processes and
actions to mitigate any such factors.
We have been supporting our local
communities for many years and the
Board encourages this good work.
This takes many forms, including
supporting charitable events,
recruitment of local apprentices,
open day support for local schools,
and educational events with local
communities where Group members
carry out projects to make the
environment or services better. In
particular in recent times we have
been working closely with the charity
CALM (Campaign Against Living
Miserably), a mental health charity
that focuses on suicide prevention
and raising awareness of this
important topic. We will continue to
work with CALM in 2025.
30
Annual Report and Accounts for the year end December 2024
Shareholders
To ensure the Board is aware of
Shareholder opinion and concerns,
the Non-Executive Directors receive
regular Shareholder feedback which
is communicated at Board meetings.
Additionally, from time-to-time,
independent information is received
through the company’s advisers,
from both investors and analysts. On
an ongoing basis, the Board is also
furnished with brokers’ and analysts’
reports when published.
The Group aims to maintain a
regular dialogue with both existing
and potential Shareholders through
an established investor relations
programme, managed by the CEO,
CFO and Company appointed NOMAD.
We are committed to maintaining an
open and constructive dialogue with
our Shareholders, providing objective
information regarding performance
and strategy.
We have, and will continue to, work
hard to improve the quality of our
communication to provide existing,
and potential new investors, with the
information they require in a format
which they wish to see. We believe
progress has already been made and
the Board is committed that this will
remain a key priority throughout 2025
and beyond.
All Shareholders who have elected for
paper copies receive a printed copy
of the Annual Report and Accounts
and all Shareholders receive the
Notice of the Annual General Meeting
(AGM) along with a proxy form,
should Shareholders wish to vote
in advance of the AGM. Following
each AGM, a notice is posted on the
corporate website confirming that
all resolutions have been passed,
including the specific results of
voting on all resolutions, including
any actions to be taken as a result of
resolutions for which votes against
have been received from at least 20%
of independent Shareholders.
Beyond the Annual General Meeting,
the Chief Executive Officer, Chief
Financial Officer and, where
appropriate, other members of the
senior management team meet
regularly with investors, analysts and
media to provide them with updates
on the Group’s business and to obtain
feedback regarding the market’s
expectations of the Group.
The Company engages in a minimum
of two investor roadshows each year,
with meetings undertaken either in
person or virtually. Since 2021 we
have used the services offered by the
Investor Meet Company (IMC) platform
to present our results to a wide reach
of existing and potential new Investors.
Presentations by the Executive
Directors of interim and full-year
results are offered to all major
Shareholders. Other Shareholders
are welcome to contact the Company
and, wherever possible, their concerns
or questions are responded to by a
Director in person.
Furthermore, the Group invites
investors and potential investors to
visit their premises, should they wish
to see day-to-day operations and
speak with representatives from the
Group in a more informal setting.
31
The Company maintains a dedicated
email address and telephone
number which investors may use
to contact the Company which,
together with the Company’s
address, are prominently displayed
on the Contacts page of the
Company’s website.
Investors may also make contact
requests through the Company’s
Nominated Advisers and Brokers,
Panmure Liberum and Singers (see
back cover for details).
Corporate social responsibility
General information about the
Group is also available via the
Company’s corporate website,
www.flowtechfluidpower.com
which includes further
information about the business,
reports and key documents and
recent Company announcements.
Interested parties have the
opportunity to register for RNS
alerts, to keep them informed
when important announcements
are released.
32
“We have taken actions to manage our cost base and
continue to manage all aspects of working capital and
capital expenditure tightly. 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.”
Russell Cash
Chief Financial Officer
The group trading performance at a glance
(*) Underlying operating profit is used as an alternative performance measure to assess the trading performance of the business and
is operating profit before separately disclosed items which are amortisation and impairment of acquired intangibles, impairment of
goodwill, negative goodwill, impairment of right of use assets, share based payments, and restructuring costs. The £3.2m differential
between underlying operating profit and underlying EBITDA relates to £3.2m in respect of depreciation charges.
Financial review
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 (see note 2)
(34.2)
(30.7)
-3.5
Underlying operating overheads
(38.4)
(35.2)
-3.2
Less Central costs (refer note 3)
(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
-3.3
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
Our geographical segments at a glance
Great Britain (“GB”)
Benelux
Island of 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)
33
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 a significant number of 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 (11.9%) growth
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
Management costs include the employment
costs of the Executive Officers, Group Leadership
Team members excluding those that have specific
segment responsibilities.
Accounting and finance covers 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 in house capability and resource as we
focus on this area of our business which we anticipate
will form a critical component of our future success.
Separately disclosed items
Impairment of goodwill and right of
use assets
The calculations which underpin the annual evaluation
of the carrying value of assets is based on a number of
key assumptions, notably revenue growth rates and the
discount rate applied to reflect the net present value of
future cash flows.
In total 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
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 £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.
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
6,040
5,302
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
Financial review
34
Annual Report and Accounts for the year end December 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 administrator against recovered
debtors. This saw assets acquired with values materially
in excess of this – the disclosure in note 24 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 net of the £0.4m repaid to the administrator
which is included within the total consideration. This
represents £0.5m 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 approx. £1m of annualised cost 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 tightly.
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.
Russell Cash,
Chief Financial Officer
9 April 2025
Net Debt
Our Net Debt position (excluding lease liabilities)
increased modestly from £14.7m to £15.1m; for clarity
£15.1m is the net of our £16.9m revolving credit facility
(RCF) and the £1.8m cash at bank we held at year end.
If IFRS16 lease liabilities are included the position is
£20.5m at 2024 year-end compared with £20.2m at
2023 year-end.
Net cash generated from operating activities totalled
£8.7m (2023: £8.2m); this is the aggregation of
operating cash inflow before working capital movements
of £3.1m (2023:£7.5m), favourable working capital
movements (excluding Thorite) totalling £5.2m (2023:
£1.8m) and tax paid of £0.8m (2023: £1.1m). After net
cash outflows after Thorite contribution of £5.8m (2023:
£2.1m) associated with investing activities, £3.2m (2023:
£3.6m) relating to financing activities and the dividend
payment of £1.4m (2023: £1.3m) this lead to a £0.4m
increase (2023: £1.3m reduction) in Bank debt.
16.0 m
14.0 m
12.0 m
10.0 m
8.0 m
6.0 m
4.0 m
2.0 m
0.0 m
FY23 (*)
Trading
cash flow*
Working
capital
movement
Issue of Share
Capital
Investment
in Thorite
Assets
purchased
Dividend
paid
Other
movements
Repayment
of lease
liabilities
£0.6m
£1.4m
£3.3m
£1.3m
£5.2m
£14.7m
£3.1m
£1.4m
(*) Opening and closing figures exclude IFRS 16 related liabilities. IFRS16 debt reduced by £0.1m in 2024.
Interest
£1.7m
FY24 (*)
£15.1m
£1.8m
This is summarised in the graph below:
35
The risk management process
Our Board has overall accountability for the Group’s risk management.
Our risk management process is co-ordinated Trasie Marsh, Group
HR and ESG Director with quarterly sessions held with the Group Risk
Board which is made up of members of our Executive Leadership
Team. We follow a simple risk management principle to Identify,
Analyse & Assess, Respond & Control and Monitor & Review.
Identify
Analyse
and
assess
Respond
and
control
Monitor
and
review
Identify:
Risks are
identified using a
variety of sources
taking into
account internal
and external
sources to ensure
that we capture
emerging risk
themes as well as
recognised risks
from within our
own ecosystem
Analyse &
Assess:
The Group Risk
Board assess all
identified risks
against a defined
impact and
likelihood criteria
to assign an
appropriate risk
criticality
Respond &
Control:
Specific
mitigation and
control actions
are put in place
for all identified
risks to reduce
the likelihood or
impact of the risk
occurring
Monitor &
Review:
The Group Risk
Board meet on
a period basis
throughout the
year to review
current risks and
discuss identify
any additional
actions necessary
to further reduce
the residual risks
Managing our risks
36
Annual Report and Accounts for the year end December 2024
Ownership
Each of the risks we’ve identified
are owned by a member of our
Executive Leadership Team who are
responsible for the management of
that risk. The Executive Leadership
Team regularly review the risk
register collectively.
Our board
Our Board confirms it has undertaken a robust review of our risk register. The Executive Leadership Team will
regularly update the Board, ensuring full visibility of any changes to our risk profile.
Accountabilities and responsibilities
Board
Overall accountability for the
approach to risk management.
Group Risk Board
Responsible for owning and
reviewing our risk management
process, ensuring mitigating
controls are implemented
and monitored and making
recommendations to the Board.
Individual Sites and Group functions
Identifying, documenting, reviewing
and sharing local or functional
risks. Where risks meet the criteria
of affecting all business units or a
significant impact to the group the
risk will be reported up to the Group
Risk Committee for inclusion in the
Group risk register.
37
What is the risk
How could it affect our business
What we are doing to manage the risk
Force Majeure
Events leading to
serious supply chain
disruption
Future global events such as
global conflict, future pandemic,
catastrophic natural events caused
by climate change or other natural
factors could lead to a shortage of
raw materials or global sanctions
leading to disruption to our critical
supply chain leading to delays
in the fulfilment of our customer
commitments.
• Continually monitoring the geopolitical
climate to identify potential issues
• We have a diverse supply chain allowing for
a secondary sourcing of products
• Through our close relationships with
our suppliers we can identify potential
increased risks and ensure mitigating
actions are taken at the earliest point
Force Majeure
Events leading to
serious economic
impact
Future global events such as
global conflict, future pandemic,
catastrophic natural events caused
by climate change or other natural
factors leading to a prolonged
market downturn.
• Continually monitoring the geopolitical
climate to identify potential issues
• Regular monitoring and proactive
management processes in place to manage
our variable cost base
• The business has a diverse customer base
across many industry verticals
• Maintaining strong investor and bank
relationships
• Robust insurance cover in place
• Remain vigilant to Government support –
furlough scheme was a good example of this
Major material
damage event to
fulfilment centre
A critical incident caused by a
natural disaster, failure of fire
suppression, inability to access site
due to local infrastructure disruption
leading to the Skelmersdale
Fulfilment Centre being inaccessible
for an extended period of time
leading to delays in the fulfilment of
our customer commitments.
• Fully documented business continuity plans
• Leverage strong supplier relationships for
customer order fulfilment
• Utilisation of stock holding from across the
Group
• Core Group transactional systems managed
from an offsite data centre
Loss of critical
operational IT
systems
Loss of critical IT systems or
infrastructure caused by physical
or technical failure leading to an
inability to service customers and
fulfil our financial obligations in a
timely manner.
• Fully documented disaster recovery plans
in place
• All critical systems replicated to a
secondary data centre
• Resilient networks in place at major sites
• Strict change management controls in place
for all critical systems and infrastructure
Risks and mitigation
We have 15 identified Group risks that are being monitored on an ongoing basis, the table below focuses on the
eight high and medium category risks only, the remaining seven risks are classified as low.
Managing our risks
38
Annual Report and Accounts for the year end December 2024
What is the risk
How could it affect our business
What we are doing to manage the risk
Cyber-attack
causing widespread
denial of IT systems
Failure of technical security controls
to block a serious cyber incident
resulting in the denial of access
to our systems or the loss of
confidential information.
• All critical systems replicated to a
secondary data centre with additional
segregated backups in place
• Vulnerabilities regularly monitored with
processes to manage patch management
regularly undertaken
• Regular control reviews taking place to
assess implications to IT changes
• Investing in additional cyber security
assessments and technical control
mechanisms to assist in data loss prevention
• Regular security campaigns run across the
business to constantly raise awareness of
cyber risks
Loss of critical skills
and people
The strong labour market and
increased costs of labour could
lead to a lack of suitable resources
being available to fulfil our customer
commitments particularly in our
engineering sector.
• Early careers strategy, to include,
apprenticeships, graduate schemes, and
our Talent Acceleration Programme.
• College associations to attract talent early
• Introduction of attractive benefits, i.e.
bonus to retain in the first instance
• Long term incentive plans to retain our very
best talent
• Leadership development programme
• Attractive employee value proposition
Major workplace
Health & Safety
incident
Inadvertent breaches of regulations
could lead to prosecution and
significant fines.
• A Health & Safety strategy, committed to
and promoted by all senior leadership
• Health & Safety KPIs for all leaders.
• Robust Health & Safety policy launched
and communicated and signed by all
employees.
• Group Health & Safety team, head of
trained to NEBOSH
Failure to adhere to
GDPR / Data privacy
laws resulting in a
data breach
Lack of process, technical controls
or employee education resulting
in personal data being used in an
inappropriate manner or breached
in a cyber incident. This could lead
to significant regulatory fines and
reputational damage.
• Investing in additional technical control
mechanisms to assist in data loss prevention
• Introduction of secure HR Information
System
• New processes to ensure compliance when
handling personal information data
• GDPR committee
• Leadership GDPR training
39
Roger McDowell Non-Executive Chair
Skills & experience
Roger is a highly successful businessman and
entrepreneur, with a strong record of delivering
shareholder value. He was Managing Director
of Oliver Ashworth for 18 years before IPO and
subsequent sale to Saint-Gobain, and won the
Sunday Times AIM Non-Executive Director of
the Year award in 2017 for his Chairmanship of
Avingtrans plc, a precision engineering business.
Appointed: June 2020 as Independent
Director, and Non-Executive Chair from
August 2020
Board Commitees
•
Chair of Nomination Committee
•
Member of the Audit, Remuneration and AIM
Compliance and Corporate Governance Committees
External Appointments
•
Non-Executive Chair of Hargreaves Services plc,
Avingtrans plc and Brand Architekts Group plc
•
Senior Non-Executive Director and Chair of
Remuneration Committee of Tribal Group plc
•
Non-Executive Director of Proteome Sciences plc and
Non-Executive Director and Chair of Audit Committee
of British Smaller Companies VCT II plc
Mike England Chief Executive Officer
Skills & experience
Master of Engineering and over 25 years in
commercial and operational leadership across
Industrial product distribution and services.
7 years at FTSE100 RS Group plc, key
leadership roles as Group Chief Operating
Officer responsible for P&L across Americas,
EMEA and APAC, President of EMEA and
initially Managing Director leading the
turnaround of UK and Northern Europe.
9 years at FTSE250 Brammer Plc (now trading
as Rubix), Key Account and Sales Director prior
to which, 9 years at Rexel across broad range
of commercial and operational roles.
Mike is passionate about creating a purpose led, high
performance culture. Highly customer centric in approach
and an advocate for diversity and inclusion. Committed to
inspiring the next generation of engineers and giving back
to the community.
Appointed: April 2023 as CEO.
Board Commitees
•
Member of the AIM Compliance & Corporate
Governance Committee
•
Other committees by invitation
External Appointments
•
None
Russell Cash Chief Financial Officer & Company Secretary
Skills & experience
Qualified as a chartered accountant with
Deloitte Haskins & Sells (now PwC) in 1991.
Spent 27 years working as a turnaround and
restructuring professional, 20 years with PwC
prior to taking Partner roles at Baker Tilly (now
RSM International) from 2008 to 2013 and FRP
Advisory from 2013 to 2018.
At both Baker Tilly and FRP he played a key role in
the success and expansion at both firms. Russell’s
experience in effecting change both in terms of
operational improvement and cash management
have served the Group well given the focus in
each of these areas in recent years. The experience Russell
has in turnaround/distressed situations served us well when
negotiating the terms of the Thorite acquisition.
Appointed: November 2018
Board Commitees
• Member of the AIM Compliance and Corporate
Governance Committee.
• Other committees by invitation
External Appointments
•
None
Our board
40
Annual Report and Accounts for the year end December 2024
Stuart Watson Non-Executive Director
Skills & experience
Stuart is a Chartered Accountant. He was
Senior Partner for EY in Yorkshire and the
North East and specialised in audit. He was
also responsible for the EY Entrepreneur of the
Year Programme. He retired from EY in 2017.
Stuart is currently a NED and Audit Committee
Chair at both Humber & North Yorkshire
Integrated Care Board and Vp plc, and is an
Advisor to Panmure Liberum.
Appointed: January 2023
Board Commitees
• Chair of the Audit Committee
• Member of the Audit, Nomination, Remuneration and AIM
Compliance and Corporate Governance Committees.
External Appointments
• Non-Executive Director and Chair of Audit Committee
of Vp plc
• Non-Executive Director and Chair of Audit Committee of
Humber and North Yorkshire Integrated Care Board
Ailsa G Webb Non-Executive Director
Skills & experience
Ailsa has held a number of lead-operational
management roles including at TNT and
Brammer Buck and Hickman. Until 2019,
Ailsa was Chief Operating Officer for the UK,
Ireland and Iceland territories at Brammer
Buck and Hickman, the UK subsidiary of Rubix
Group, Europe’s largest supplier of industrial
maintenance, repair and overhaul products
and services. In 2019, Ailsa joined HSS Hire
Services, Scotland, one of the UK’s largest
equipment rental companies, where she is
Managing Director and, in early 2021 she took
over as Managing Director for ABird and Apex
Power Solutions, two service business parts of
HSS Group.
Ailsa has a deep understanding of the industrials
distribution sector, including within e-commerce where
she has a wealth of digital transformation expertise driving
revenue growth through e-commerce strategies.
Appointed: March 2022
Board Commitees
• Member of the Audit, Nomination, Remuneration and AIM
Compliance and Corporate Governance Committees
External Appointments
• No other Board appointments
• Executive role as described above
Jamie Brooke Non-Executive Director
Skills & experience
Jamie has had successful roles in listed and
private equity fund management, originally
starting out with 3i plc. Over his career, having
sat on 20+ different boards, he has focused
on driving shareholder value and has gained
experience covering investment, strategy and
governance, M&A, audit and consultancy. Most
recently he worked with Hanover Investors
and, prior to this, Jamie ran the Catalyst funds
with the Volantis team under the umbrellas
of Lombard Odier, Henderson and Gartmore.
He trained and qualified as a Chartered
Accountant with Deloitte.
Appointed: March 2022
Board Commitees
• Chair of the Remuneration Committee.
• Member of the Audit, Nomination, AIM Compliance
and Corporate Governance Committees
External Appointments
• CIO/ Director of Kelso Group Holdings and associated
companies
• Chair of Titon Holdings PLC, PadelStars Limited and Triple
Point Venture VCT PLC
• Non-Executive Director of Oryx International Growth Fund
PLC and Chapel Down Group PLC
41
Framework for
corporate governance
The QCA Code identifies ten
principles to be followed as a
guide to help companies deliver
value for shareholders. This relies
on effective management by the
Board, accompanied by good
communication which serves to
develop confidence and trust.
The Company remains committed
to maintaining high standards of
corporate governance and has
adopted the Quoted Companies
Alliance Corporate Governance
Code 2018 (“the QCA code”). Our
approach in relation to complying
with each of the ten principles of
the QCA code is set out below.
I am pleased to report that we
continue to consider we are
compliant with all aspects of the
requirements of the QCA Code.
Compliance with
the QCA corporate
governance code
Within our Annual Report, we are
required to demonstrate compliance
with each of the Principles:
Principle 1
“Establish a strategy and business
model which promote long-term
value for shareholders”
Following the arrival of Mike
England as CEO in April 2023 the
strategy, associated business
model and related key performance
indicators were revisited and these
are now considered embedded
within the business; key elements
of this are detailed earlier in the
Report & Accounts. We believe this
provides existing, and potential
new, Investors with evidence of our
determination to achieve long-term
shareholder value.
Principle 2
“Seek to understand and
meet shareholder needs and
expectations”
We work hard to ensure we achieve
a quality delivery of meaningful
information on a consistent basis.
We continue to work closely with
external advisors, notably our Joint
Brokers (Panmure Liberum and
Singers) who provide guidance in this
regard. It is also helpful that some of
our Non-Executive Directors have a
wealth of experience in managing the
expectations and understanding the
agendas of our key Investors.
The entire Board is updated on
shareholder feedback, in particular
following presentations delivered
by our Executive Directors after the
announcement of half year and full
year results. The Executive Directors
and supporting Leadership Team have
also hosted a number of site visits with
existing and potential new investors to
aid the understanding of our business.
All Directors are encouraged to attend
the Annual General Meeting.
Should Investors wish to make
contact, details of all Directors are
provided via our website.
Principle 3
“Take into account wider
stakeholder and social
responsibilities and their implication
for long-term success”
The Board recognises that the
Company’s relationships with
customers, suppliers and employees
are individually, and collectively,
critical to its success. Efforts have
always, and will continue to be,
made to develop strong relationships
with customers and suppliers and
increasing emphasis has been placed
on engagement with employees;
the COVID-19 pandemic resulted in
certain incremental activities around
employee wellbeing initiatives and we
have since consistently built on these
initiatives. The Executive Directors
regularly engage with other senior
employees to keep them suitably
appraised of key developments; this
information is then cascaded through
the organisation through appropriate
reporting channels.
Chair’s statement on corporate governance
A key component of my role is to oversee the development of the Group’s
corporate governance model and to ensure there is continued clear focus
on this important area of our business.
Corporate
governance report
42
Annual Report and Accounts for the year end December 2024
The Company has undertaken
engagement surveys across all staff
for a number of years. These surveys
are used to understand what is
working well and to the extent there
are areas where improvements have
been identified, plans are put in place
to address any concerns.
Linked to all of this our comments
in respect of Section 172 of the
Companies Act 2006 requirements
and in a variety of other areas are
provided in our Sustainability report
on pages 21-26.
Principle 4
“Embed effective risk management,
considering both opportunities
and threats, throughout the
organisation”
Our approach to risk is set out within
the Risk Management section of this
report. Whilst the Board has overall
responsibility, the importance of
developing our processes and controls
is an area of focus for many others
within the Group. The Audit Committee
has responsibility for reviewing internal
controls and in this regard, there is
regular communication between the
Committee and the Internal Audit team
and Executive Management.
On pages 35-38 we have sought
to identify our key areas of risk and
provide comments to demonstrate
the investment we have made to put
measures in place to address each
of these. In particular, the systems of
internal controls and the investment
we have made in our Business
Systems, Internal Audit and Project
Management functions demonstrates
how important these areas are, and
will always remain, to us. We have also
made a significant investment in our
Health & Safety agenda over the last
five years.
Principle 5
“Maintain the Board as a well-
functioning team led by the Chair”
Details of the Board, and their roles
within the Board environment and
within Committees, is set out on
pages 39-46.
The Board is chaired by Roger
McDowell and meets regularly
with formal Board meetings taking
place in most months of the year.
Audit Committee meetings are held
regularly around announcement
activity and Remuneration
Committee and Nomination
Committee meetings on an as and
when needed basis.
The Non-Executive Directors are
considered to be independent of
management and from any business
relationship which could materially
interfere with their independent
judgement. The Senior Non-
Executive Director is Jamie Brooke
and is available to Shareholders if
they have any concerns.
Principle 6
“Ensure that between them, the
Directors have the necessary
up-to-date experience, skills and
capabilities”
A key role of the Nomination
Committee is to ensure that the
requisite skills and relevant experience
are evident in candidates for Board
roles. At the time of appointment, each
Director receives training provided
by our NOMAD and legal advisers,
covering the responsibilities of a
Director generally and in particular
the requirements when involved in the
Board of a listed company.
Our NOMAD presents annually to
ensure all Directors are updated with
regards to duties and responsibilities.
Brief biographies of each of our
Directors are outlined on pages 39-40.
Principle 7
“Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement”
The Board undertakes regular
evaluations of its effectiveness.
This exercise involves each Board
member completing an assessment
which provides numeric scoring
against specific categories as well as
an opportunity for recommendations
for improvement to be provided.
The areas reviewed include:
• Board/Committee composition
(including succession planning)
• Board/external reporting and
information flows
• Board processes, internal control
and risk management
• Board accountability
• Executive management
effectiveness, and
• Standards of conduct
Any areas where improvement is
deemed necessary are discussed and
appropriate action plans put in place.
Principle 8
“Promote a corporate culture that
is based on ethical values and
behaviours”
The Board aims to promote and
maintain a culture of integrity across
all businesses within the Group.
An open culture is encouraged
within the Group, with regular
communications to employees
regarding progress and business
updates. Employee feedback is
encouraged through line management
and committee discussions.
The Group has systems in place
designed to ensure compliance with
all applicable laws and regulations
and conformity with all relevant codes
of business practice.
Compliance with the Bribery Act 2010
involves the adoption of Standard
Practice initiatives with appropriate
training being provided.
The Group takes appropriate steps
to comply with the provisions of the
Market Abuse Regulations and the
Modern Slavery Act.
By way of example of the ongoing
emphasis in this area the Group
has recently introduced a refreshed
policy on the avoidance of Sexual
Harassment. This has been rolled
our across the business, with a focus
on educating our colleagues, as well
as having a clear path for anyone to
report any concerns they have.
Ever increasing emphasis is being
placed on the Environmental, Social
& Governance agenda, evidence of
which can be seen via the comments
provided on pages 21-26 in this
Report. We believe that once again
good progress has been made during
the course of 2024.
43
Principle 9
“Maintain governance structures
and processes that are fit for
purpose and support good decision
making by the Board”
Having invested in certain of our
central functions, we continue to
focus efforts and resource on the
implementation of improved processes
in areas which we believe will lead to
further efficiencies to better manage
and control the business we currently
have and provide a robust platform to
support future growth.
The narrative which follows later in
this section of the report explains the
roles and responsibilities across Board
members and its various committees.
Principle 10
“Communicate how the Company
is governed and is performing
by maintaining a dialogue with
Shareholders and other relevant
stakeholders”
This provides details of matters
reserved for the Board, the role
of Board Committees and other
aspects relating to corporate and
social responsibility.
Details relating to this are contained
in the Group’s website
www.flowtechfluidpower.com
The Board
The main responsibilities of the
Board are the creation and delivery
of sustainable Shareholder value by
promoting the long-term success of
the Company and upholding good
corporate governance.
In addition to routine consideration
of both financial and operational
matters, the Board determines the
strategic direction of the Group.
The Board has a formal schedule of
matters specifically reserved for it
which includes:
1. Development and approval of
the Group’s strategic aims and
objectives
2. Approval of annual operating and
capital expenditure budgets
3. Oversight of the Group’s operations
4. Approval of the Group’s
announcements and financial
statements
5. Approval of new Bank facilities
or significant changes to existing
facilities
6. Declaration and recommendation
of dividends
7. Approval of major acquisitions,
disposals, and capital expenditure
8. Approval of delegated authority
limits
9. Succession planning and
appointments to the Board and
its Committees
10. Review of the Group’s overall
corporate governance
arrangements and reviewing the
performance of the Board and its
Committees
11. Maintenance of sound internal
control and risk management
systems, and
12. Approval of the division of
responsibilities between the
Chair, Chief Executive and other
Executive Directors and the
terms of reference of the Board
Committees.
The Chair
The main responsibilities of the Chair
are to lead the Board, ensuring its
effective management of the Group’s
operations and governance. The
Chair sets the Board’s agenda and
promotes a strong culture of challenge
and debate. He also plays a key role
in investor relations and corresponds
with major Shareholders as he sees fit.
This is achieved by:
1. Chairing Board meetings, setting
agendas in consultation with
the Chief Executive Officer and
encouraging the Directors to
participate actively in Board
discussions
44
Annual Report and Accounts for the year end December 2024
2. Leading the performance
evaluation of the Board, its
Committees, and individual
Directors
3. Promoting high standards of
corporate governance
4. Ensuring timely and accurate
distribution of information to the
Directors
5. Ensuring effective communication
with Shareholders
6. Periodically holding meetings
with fellow Non-Executive
Directors without the Executive
Directors being present, and
7. Establishing an effective working
relationship with the Chief
Executive Officer by providing
support and advice whilst
respecting executive responsibility.
The Chief Executive Officer
The CEO is responsible for the
day-to-day management of all
the Group’s activities and the
implementation and delivery of the
Board’s strategic objectives. He
also promotes appropriate cultural
values and standards and seeks
to maintain good relationships and
communications with investors.
Company Secretary
Russell Cash, our Chief Financial
Officer, is the Company Secretary
and as such is responsible for legal
and regulatory compliance as well
as assisting the Chair in preparation
for, and the effective running of,
Board meetings.
Senior Independent
Director
Jamie Brooke, as the Senior
Independent Director and acts as a
conduit for all Directors, giving advice
and guidance where appropriate.
Board composition
The Board comprises an independent
Non-Executive Chair, two Executive
Directors and three other Non-
Executive Directors. Details of the
Directors’ remuneration and terms
of appointment are set out in the
Directors’ Remuneration report on
pages 47-49. Biographical details of
the Directors are included on pages
39-40.
Roger McDowell is Chair of the Board
and the Nomination Committee.
Stuart Watson is Chair of the Audit
and AIM Compliance and Corporate
Governance Committees.
Jamie Brooke is Chair of the
Remuneration Committee.
The Executive Directorships are
full-time positions. The roles of Chair
and Non-Executive Director require
a commitment of approximately five
days per month. All the Non-Executive
Directors have confirmed their ability
to meet such commitments. Each
Non-Executive Director is required to
inform the Board of any changes to
their other appointments.
Re-election
All Directors of the Board are subject to
election by the Shareholders at the first
AGM following their appointment by the
Board and all Directors will also stand
for re-election annually at the AGM.
Meetings of the Board
There were 10 formal Board meetings
during the year.
Formal meetings are supplemented,
when circumstances dictate, by
other meetings often making use of
teleconference facilities. In addition,
the Chair and Non-Executive Directors
have met during the year without the
Executive Directors.
Board Committees
Executive Management
To support the two Executive Directors,
we have an Executive Leadership
Team which sits beneath PLC level.
This Group includes individuals who
lead various functional activities across
the Group including Sales, Operational,
Marketing, Digital and Information
Technology and Human Capital
matters, and manages all aspects of
day-to-day activities, including:
1. Implementing the strategy as set
out/agreed by the Board
2. Overseeing all commercial
operations of the Group, ensuring
good and effective communication
in key areas and alignment of
local business objectives to the
strategic direction at Group level
3. Assessment of growth
opportunities, both organic and
potential acquisition opportunities
4. Talent management and
succession planning
5. Product quality
6. Health and safety
7. Financial control and systems,
including IT infrastructure and
development, and
8. Risk management.
The Board formally delegates
responsibility to four committees:
the Nomination, Remuneration,
AIM Compliance & Corporate
Governance and Audit Committees.
The Nomination
Committee
Chaired by Roger McDowell
This Committee is responsible
for ensuring that the Board is
sufficiently well equipped to ensure
that the Group continues to be
governed by suitably qualified
people with the breadth and depth
of experience required to effectively
lead the business.
The Committee recommends
and reviews nominees for the
appointment of new Directors to the
Board and ensures that there is due
process used in selecting candidates.
The Remuneration
Committee
Chaired by Jamie Brooke
The Remuneration Committee meets
at least once a year to determine
and agree remuneration packages
of the Chair and Executive Directors
and other employee benefits. The
measures put in place to reward the
Executive Directors is detailed in the
Directors’ Remuneration section of
this Report.
Where appropriate, the
Committee seeks advice from
remuneration consultants to gain an
understanding of current trends and
latest developments. In addition,
taxation and legal advisors will
usually be involved in drafting and
finalising reward agreements.
The remuneration of the Non-
Executive Directors is agreed
45
Corporate governance report
by the Chair and Executive
Directors. Details of the Directors’
remuneration are set out in the
Directors’ Remuneration Report on
pages 47-49.
The AIM Compliance &
Corporate Governance
Committee
Chaired by Stuart Watson
The AIM Compliance & Corporate
Governance Committee usually meets
at least one per year. It is responsible
for establishing, reviewing, and
monitoring the Group’s procedures
and controls for ensuring compliance
with the AIM Rules and the timely
disclosure of information to satisfy
the Group’s legal and regulatory
obligations. The meetings were
attended by all Directors.
Our NOMAD, Panmure Liberum,
provided all Directors with an
update with regards to Director
responsibilities on 29 January 2025.
The Audit Committee
Chaired by Stuart Watson
The Audit Committee meets at
least twice a year with the Group’s
Auditor and as otherwise required.
Its duties are to:
1. Monitor the integrity of the
financial statements
2. Review the quality of the Group’s
internal controls, ethical standards,
and risk management systems
3. Review the Group’s procedures
for detecting and preventing
bribery and fraud, corruption,
sanctions, and whistleblowing
4. Ensure that the financial
performance of the Group
is properly reported on and
monitored, including reviews of
the annual and interim accounts,
results announcements, and
accounting policies, and
5. Oversee the relationship with the
Group’s external Auditor.
During the year, the Audit
Committee discharged its
responsibilities by:
1. Reviewing the Group’s draft
financial statements, preliminary
announcements and interim
results statement prior to Board
approval and reviewing the
external Auditor’s reports thereon
2. Reviewing the external Auditor’s
plan for the audit of the Group
financial statements, confirmations
of auditor independence and
proposed audit fee and approving
terms of engagement for the audit
3. Considering the effectiveness
and independence of the external
Auditor and recommending to
the Board the reappointment of
Grant Thornton UK LLP as external
Auditor
4. Considering the review of material
business risks
5. Monitoring of reporting and follow-
up of items reported by employees
6. Considering the significant risks
and issues in relation to the
financial statements and how
these were addressed including:
revenue recognition; impairment of
inventory; impairment of goodwill
and intangibles; impairment of
investments and intercompany
receivables; going concern
7. Considering the adequacy of
accounting resource and the
development of appropriate
systems and control
8. Engaging with external providers
to assist with certain aspects of
accounting disclosure
9. Considering policies on non-
audit engagements for the
Company’s Auditor
10. Reviewing reports from
the Internal Audit Function
and providing input to the
implementation of performance
improvement measures.
The Audit Committee met twice
during 2024 (21 March 2024 ahead
of the finalisation of the 2023
Report and Accounts, 17 September
2024 to review the half year results
and 19 November 2024 to consider
the Auditor’s planning document)
with all Directors in attendance. In
accordance with best practice, the
Chairman of the Audit Committee
met, and spoke, separately with the
Audit Engagement Leader to provide
an opportunity for any relevant
issues to be raised directly with him.
Board effectiveness
Knowledge & training
Each newly appointed Director is
provided with an induction programme
comprising visits to Group locations,
meetings with key personnel and
introductions to the Group’s advisers.
In addition, care is taken to ensure
each new Director has as good
understanding as soon as possible
with regards to the Group’s strategy,
risks, challenges and control and
governance procedures.
The Chair is responsible for ensuring
that each Director is supplied with
timely and relevant information of a
quality, and in a form, which enables
them to discharge their duties.
The Chair leads an exercise performed
on an annual basis to evaluate the
effectiveness of the Board.
46
Annual Report and Accounts for the year end December 2024
There is a policy in place by which
a director may obtain independent
professional advice at the Group’s
expense where their duties so require.
The training needs of Directors
are discussed, and appropriate
arrangements put in place. We
work closely with external training
providers and have a programme
in place to deliver tailored training
to all members of our central and
divisional management teams.
Each Director is required to keep up
to date with developments in the
Group’s areas of operation and their
own knowledge base.
Regular discussions with senior
members of Group management and
the Group’s advisers, together with
their own professional development
obligations and experience in other
roles, are usually sufficient to
achieve this.
Our Nominated Adviser is invited
to the AIM Compliance and
Corporate Governance Committee
to inform the Board of developments
in these areas.
Diversity
The Board is committed to a policy
of equal opportunity and diversity to
attract and retain the talent needed
to fulfil our strategic aspirations.
Our culture recognises the need for
diversity across a wide spectrum of
factors including experience, skills
and potential, as well as ethnicity,
sexual orientation and gender.
Appointment and advancement
are based on merit with no positive
or negative discrimination. We
recognise that further strengthening
our diversity as and when
opportunities arise is important to
our future well-being.
The Nomination Committee reviews
various matters when considering
the constitution of the Board,
including diversity alongside
other important factors such as
experience and capabilities.
This year sees us including
comments on gender pay gap for
the third time. As we state in the
Sustainability section of the Report,
we are determined that gender
plays no part in any decisions
we make relating to recruitment,
remuneration or career progression.
Internal controls & risk
management
The Directors are responsible for the
Group’s system of internal control.
However, such a system is designed
to manage, rather than eliminate,
the risk of failures to achieve
business objectives and can provide
only reasonable and not absolute
assurance against misstatement
or loss.
The key elements within the
Group’s system of internal control
are as follows:
1. Regular Board meetings to
consider matters reserved for
Directors’ consideration
2. Regular management reporting
3. Regular Board reviews of
corporate strategy, including
a review of material risks and
uncertainties facing the business
4. Established organisational
structure with clearly defined
lines of responsibility and levels
of authority
5. Documented policies and
procedures
6. Regular review by the Board of
financial budgets, forecasts and
covenants with performance
reported to the Board monthly,
and
7. Detailed investment process for
major projects, including capital
investment analysis.
47
The Directors’ Remuneration report sets out the key pillars of the
remuneration policy for the Group, as well as the rationale for any major
decisions made by the remuneration committee during the year. This is
intended to help investors assess and understand the remuneration policy
in the light of the strategy for the Group. This report is voluntarily disclosed.
Director’s
remuneration report
The Remuneration Committee
The Remuneration Committee operates under a formal charter, which
outlines its responsibilities. These include:
1. Policy Formulation:
The committee reviews and
recommends to the Board the
Company’s remuneration policy,
ensuring that it reflects the
Company’s strategic objectives,
performance, and industry norms.
2. Executive Director Remuneration:
The committee assesses the
remuneration packages of
executive directors, considering
performance against key
performance indicators, individual
contributions, and market
benchmarks.
3. Performance Metrics:
The committee establishes
and reviews performance metrics
for incentive schemes, ensuring that
they are challenging and aligned
with the Company’s long-term goals.
4. Share-based Incentives:
The committee oversees the
design and operation of share-
based incentive plans, ensuring
they contribute to the long-term
success of the Company and
align with shareholders’ interests
5. Risk Management:
The committee evaluates the risk
associated with remuneration
policies and practices, ensuring
they do not encourage excessive
risk-taking that could jeopardize
the Company’s sustainability.
The Remuneration Committee
seeks to act fairly and reasonably
and in the interests of the Company
and Shareholders.
Our people lie at the heart if our
success; it is vital that we have the
right calibre of people and that we
incentivise excellent performance.
In 2024 the actions of the
Remuneration Committee were
focused on the following key areas:
• Implementing a new Long Term
Incentive Plan structure for senior
leaders within the business who sit
immediately below the PLC Board
• Approving annual performance
targets and related bonuses for
the Executive Directors
• Reviewing and approving the
basis of the Group wide bonus
mechanism for introduction in
2025 to ensure all employees are
suitably rewarded for performance
against targeted objectives
aligned with the overall strategic
direction of the Group
• Reviewed the fees charged
by the Chair and other
Non- Executive Directors.
48
Annual Report and Accounts for the year end December 2024
Salary and fees
£000
Benefits
£000
Bonus
£000
Total 2024
£000
Total 2023
£000
Executives
Mike England
363
4
0
367
264
Russell Cash
225
3
0
228
274
Bryce Brooks*
0
310**
Non-Executives
Roger McDowell
80
80
53
Nigel Richens
(resigned 25 April 2023)
0
18
Jamie Brooke
50
50
59
Ailsa Webb
45
2
47
47
Stuart Watson
50
50
47
822
1,072
Directors’ detailed remuneration
* Bryce Brooks stepped down as CEO on 12 April 2023
** Compensation for loss of office included in 2023 figure
Remuneration policy relating to Executive Directors
The remuneration policy of the
Group is:
1. To provide a suitable
remuneration package to attract,
motivate and retain Executive
Directors, and
2. To ensure that all long-term
incentive schemes for the
Directors are in line with the
Shareholders’ interests
The Committee makes
recommendations to the Board.
No Director plays a part in any
discussion about their own
remuneration. The Remuneration
Committee members are expected
to draw on their experience to
judge where to position the Group,
relative to other companies’ and
other groups’ rates of pay when
considering remuneration packages
for Executives.
The Executive Directors’
remuneration comprises:
• Annual salary
• Performance related cash bonus
• Long-term incentive plans
controlled by the Remuneration
Committee who have the
authority to vary payments from
amounts arising from agreed
formulae/structures and vary the
structure and policy each year.
Benefits in kind are the provision
of medical insurance premiums and,
in the case of Bryce Brooks*,
a motor vehicle.
The Executive Directors have
service contracts which provide for
notice periods of twelve months.
Each of the Non-Executive Directors
has a service contract which
provides for a notice period of
three months.
49
Director’s renumeration report
Directors’ share interests
The table below shows the interests of the Directors in office at the end of the year in the share capital of
the Company:
As at 31 December 2024
number of ordinary shares
Compensation for loss of office
number of ordinary shares
Executives
Mike England
60,470
60,470
Russell Cash
48,175
48,175
Non-Executives
Roger McDowell
1,132,000
1,082,000
Jamie Brooke
240,000
240,000
Ailsa Webb
40,121
40,121
Stuart Watson
8,965
8,965
Scheme
As at 31 December 2024
As at 31 December 2023
Russell Cash
EMI (Unapproved)
300,000
300,000
Mike England
LTIP – 2023 issue
1,583,333
1,583,333
Russell Cash
LTIP – 2023 issue
762,255
762,255
Directors’ share options
Details of share options held by the Directors over the ordinary shares of the Company are set out below:
The EMI and LTIP share options were issued as part of an employee share-based remuneration scheme called the
‘Enterprise Management Incentive Plan’ and ‘Long-Term Incentive Plan.’ Further details are provided in note 22 to the
consolidated financial statements.
Future Outlook
Looking ahead, the Remuneration Committee will continue to adapt and refine remuneration policies
to meet evolving business needs and industry best practices. We are committed to engaging with
shareholders to understand their perspectives and ensure transparency and accountability in our
remuneration practices.
We appreciate the continued support of our shareholders and remain dedicated to delivering long-term
value for all stakeholders.
50
The Group financial statements have
been prepared in accordance with
UK-adopted international accounting
standards. The Company financial
statements have been prepared in
accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure
Framework’ (FRS 101).
A review of the Group’s trading and
an indication of future developments
are contained in the Strategic report
on pages 2-26. Details of revenue
and operating profits for each
operating segment are contained
in note 3 to the consolidated
financial statements. The principal
subsidiaries contributing to the
profits and net assets of the
Group are listed in note 12 to the
consolidated financial statements.
Flowtech Fluidpower plc is
incorporated in England (Company
registration number 09010518) and
has its Registered Office at Bollin
House, Bollin Walk, Wilmslow, SK9
1DP, Cheshire, UK.
Results and dividends
The results for the year ended 31
December 2024 are set out in the
consolidated income statement on
page 65.
The Group has reported an operating
loss of 25.2 million (2023: loss
£10.4 million). After accounting for
net finance costs, the consolidated
income statement shows a loss
from continuing operations before
taxation of £27.1 million (2023: loss
£12.1 million).
The Board believe the market will
offer opportunities for further bolt-on
acquisitions at distressed prices, as
such we believe that shareholders’
interests will be best served by
passing on the dividend in the
current year and having the extra
cash available for such transactions.
In 2024 the dividend payout relating
to FY2023 was approximately £1.4m.
Directors
The Directors who held office during
the year and up to the date of
approval of the financial statements
are as follows:
• Russell Cash
• Roger McDowell
• Ailsa Webb
• Jamie Brooke
• Stuart Watson
• Mike England
Short biographies of each Director
currently in office are provided on
pages 39-40.
The interest which the Directors
serving at the end of the year, or
at the date of this Report, had in
the ordinary share capital of the
Company, and its subsidiaries, at 31
December 2024 is disclosed in the
Directors’ Remuneration report on
pages 47-49.
Details of the Directors’ share
options are provided in the Directors’
Remuneration report on page 49.
The Directors present their Annual Report, together with the audited
Group and Company financial statements for the year ended 31
December 2024.
Directors’ report
Shareholders – 28 February 2025
Number of
shares held
% of share
capital
Odyssean Capital
10,500,000
16.59
Harwood Capital
6,500,000
10.27
Close Asset Mgt
5,038,337
7.96
Downing
3,905,603
6.17
Charles Stanley
3,120,396
4.93
Lazard Freres Gestion
2,489,563
3.93
Interactive Investor
2,034,300
3.22
BGF Investments
1,896,724
3.00
Raymond James Investment Services
1,794,555
2.84
Integrated Financial Arrangements
1,674,555
2.65
The table on the below shows the position as at 28 February 2025
(being the last practicable date before the publication of this Report)
51
Material interest
in contracts
No Director, either during or at
the end of the financial year, was
materially interested in any significant
contract with the Company or any
subsidiary undertaking.
Share capital
Details of the Company’s share
capital are in note 23 to the
consolidated financial statements.
The Company’s share capital
comprises one class of ordinary shares
and as at 28 February 2025 there were
in issue 61,492,673 fully paid ordinary
shares of 50p each. All shares are fully
transferable and rank pari passu for
voting and dividend rights.
The Company has been notified of the
following interest in more than 3% of
the Company’s issued share capital.
Financial instruments
& risk management
Information about the use of financial
instruments by the Company and its
subsidiaries, and the Group’s financial
risk management policies, are given in
note 27. It is not the Group’s policy to
trade in financial instruments.
Directors’ responsibility
under Section 172
Comments on how the Directors
have had regard for the interests of
various stakeholders whilst making
key decisions are contained on
page 28, under the Corporate Social
Responsibility section.
Conflicts of interest
In line with the Companies Act 2006,
all Directors have a duty to avoid
situations where they have or could
have a direct or indirect conflict of
interest with the Company. The Act
allows Directors of public companies
to authorise conflicts and potential
conflicts where appropriate to
avoid a breach of duty. The Group
has specific procedures in place
to deal with any potential conflicts
of interest and during this financial
year, no actual or potential conflicts
have arisen.
Board composition
The Board aims to ensure it has
the required balance of skills and
experience. An assessment of the
skillset and effectiveness of the Board
is performed on an annual basis.
Re-election
All Directors of the Board are subject
to election by the Shareholders at the
first AGM following their appointment
by the Board and in accordance with
the Code, all Directors will also stand
for re-election annually at the AGM.
Liability insurance
In line with market practice, each
Director is covered by appropriate
Directors’ and Officers’ liability
insurance (D&O) at the Company’s
expense. The D&O insurance covers
the Directors and Officers against
the costs of defending themselves
in legal proceedings taken against
them in that capacity and in respect
of any damages resulting from
those proceedings. The Company
also indemnifies its Directors and
Officers to the extent permitted by
law. Neither the insurance nor the
indemnity provides cover where
the Director or Officer has acted
fraudulently or dishonestly.
Annual general meeting
Whilst Shareholders have the
right to attend, speak and vote at
the meeting if they so wish, we
are encouraging Shareholders to
submit a proxy vote in advance of
the Annual General Meeting and to
appoint the Chairman of the meeting
as their proxy rather than attend
the meeting in person. We are also
providing a facility which will enable
Shareholders to view the meeting
electronically (although they will not
be able to vote through this facility)
and to submit questions prior to the
AGM, which will be addressed at the
meeting or otherwise responded to.
The AGM will be held on 17 June 2025
at 11am. The Company is facilitating
an online AGM experience via the
Investor Meet Company platform,
details of which are contained in the
Notice of Meeting. Those joining
the meeting remotely will have the
opportunity to join the meeting from
any remote location and to listen to
the proceedings of the meeting. The
webcast will also be available on the
website after the event.
Subsequent events
The Directors do not consider that
there are any material subsequent
events to report since the Statement
of Financial Position date.
Corporate governance
The Group’s statement on corporate
governance can be found in the
Corporate Governance report on
pages 41 to 46. This forms part of this
Directors’ report and is incorporated
into it by way of this cross reference.
Our environment
The Group’s comments as regards
the impact our operations have
on the environment, and recent
initiatives that have been introduced
with regards to streamlined energy
and carbon reporting requirements,
are referred to in the sustainability
section of this Report on pages 21
to 26. These comments form part of
this Directors’ report by way of this
cross reference.
Engagement with
employees, suppliers,
customers and others
The Group’s comments in these areas
are included in the sustainability section
of this Report on pages 21-26. These
comments form part of this Directors’
report by way of this cross reference.
Going concern
The financial statements are prepared
on a going concern basis which the
Directors believe to be appropriate for
the following reasons:
• Although the Group saw a
£25.2million operating loss
in 2024 (2023: loss £10.4m),
after adding back separately
disclosed items, this represents
an underlying operating profit of
£2.7 (2023: £6.0m).
• The Group is expecting to trade
profitably in 2025 and beyond;
• Under terms agreed in February
2023, the Group renewed the
Revolving credit facility for a
period of 3 years, up to February
2026, with an option to extend by
a further year to February 2027.
In fact, in early 2024, the facility
was extended until May 2027. The
renewed facility carries a nominal
Director’s report
52
Annual Report and Accounts for the year end December 2024
interest rate of SONIA + 2.40%
and is subject to a non-utilisation
fee of 0.84% The facility is
secured by legal charges over
certain of the Group’s assets
which include trade receivables
and stock. The Group also has
a £5,000,000 overdraft facility
which was reviewed in February
2023 and on-going support was
approved. Whilst technically
repayable on demand there is no
expectation that the bank would
ever withdraw this facility.
• The Group remains compliant
with all covenants contained in the
Banking Agreement;
• At the end of 2024 the Group’s
net debt was £15.1m (2023:
£14.7m); this is £9.9 million within
the aggregate banking facilities
which include a £5.0 million
overdraft facility.
The Directors have prepared forecasts
covering the period to December
2026 and this is our going concern
assessment period. Naturally, these
forecasts include a number of key
assumptions notably relating, inter
alia, to revenue, margins, costs and
working capital balances.
In any set of forecasts there are
inherent risks relating to each
of these assumptions. If future
trading performance significantly
underperformed expectations,
management believe there would
be the ability to mitigate the impact
of this by careful management of
the Group’s cost base and working
capital and that this would assist in
seeking to ensure all bank covenants
were complied with and the business
continued to operate well within its
banking facilities.
We have performed stress testing,
based on revenue reductions, and
are satisfied that the Group is able
to remain Covenant compliant in
these situations. The Directors view
the set of circumstances required
for such a situation to crystallise
as highly unlikely and as such not
reasonably plausible scenarios.
The Directors believe the business
will continue to operate within its
agreed banking facilities and comply
with all banking covenants. As such
the Group therefore continues to
adopt the going concern basis is
preparing its financial statements.
Statement of Directors’
Responsibilities
The Directors are responsible
for preparing the Annual Report
& Accounts in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors have prepared the
financial statements in accordance
with UK-adopted international
accounting standards.
The Company financial statements
have been prepared in accordance
with United Kingdom Generally
Accepted Accounting Practice
(United Kingdom Accounting
Standards and applicable law)
including FRS 101 ‘Reduced
Disclosure Framework’. Under
company law, the Directors must not
approve the financial statements
unless they are satisfied that they
give a true and fair view of the state
of affairs and profit or loss of the
Company and Group for that period.
In preparing these financial
statements, the Directors are
required to:
• select suitable accounting policies
and then apply them consistently
• make judgements and accounting
estimates that are reasonable
and prudent
• for the consolidated financial
statements state whether UK-
adopted international accounting
standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements
• for the Company financial
statements state whether
applicable UK Accounting
Standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements, and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the
Company and enable them to ensure
that the financial statements comply
with the Companies Act 2006. They
are also responsible for safeguarding
the assets of the Company and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
The Directors confirm that:
1. so far as each Director is
aware, there is no relevant
audit information of which the
Company’s Auditor is unaware; and
2. the Directors have taken all the
steps that they ought to have
taken as Directors in order to make
themselves aware of any relevant
audit information and to establish
that the Company’s Auditor is
aware of that information.
The Directors are responsible for
preparing the Annual report in
accordance with applicable law and
regulations. Having taken advice from
the Audit Committee, the directors
consider the Annual report and
financial statements, taken as a whole,
provides the information necessary to
assess the Company’s performance,
business model and strategy and is
fair, balanced and understandable
By order of the Board
Russell Cash,
Chief Financial Officer
& Company Secretary
8 April 2025
Section 3
Financial Statements
54
Our opinion on the financial
statements is unmodified
We have audited the financial
statements of Flowtech Fluidpower
Plc (the ‘Company’) and its
subsidiaries (the ‘Group’) for the
year ended 31 December 2024,
which comprise the Consolidated
Income Statement, the Consolidated
Statement of Comprehensive
Income, the Consolidated
Statement of Financial Position,
the Consolidated Statement of
Changes in Equity, the Consolidated
Statement of Cash Flows, the
Notes to the Consolidated Financial
Information, the Company Income
Statement, the Company Statement
of Financial Position, the Company
Statement of Changes in Equity and
the Notes to the Company Financial
Information, including material
accounting policy information. The
financial reporting framework that
has been applied in the preparation
of the Group financial statements
is applicable law and UK-
adopted international accounting
standards. The financial reporting
framework that has been applied
in the preparation of the Company
financial statements is applicable
law and United Kingdom Accounting
Standards, including Financial
Reporting Standard 101 ‘Reduced
Disclosure Framework’ (United
Kingdom Generally Accepted
Accounting Practice).
In our opinion:
• the financial statements give
a true and fair view of the state
of the Group’s and of the
Company’s affairs as at 31
December 2024 and of the
Group’s loss and the Company’s
loss for the year then ended;
• the Group financial statements
have been properly prepared in
accordance with UK adopted
international accounting standards;
• the Company financial statements
have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting
Practice; and
• the financial statements have
been prepared in accordance
with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in
accordance with International
Standards on Auditing (UK)
(ISAs (UK)) and applicable law.
Our responsibilities under those
standards are further described in
the ‘Auditor’s responsibilities for the
audit of the financial statements’
section of our report. We are
independent of the Group and
the Company in accordance with
the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the
FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled
our other ethical responsibilities
in accordance with these
requirements. We believe that the
audit evidence we have obtained is
sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating
to going concern
We are responsible for concluding
on the appropriateness of the
directors’ use of the going concern
basis of accounting and, based
on the audit evidence obtained,
whether a material uncertainty
exists related to events or
conditions that may cast significant
doubt on the Group’s and the
Company’s ability to continue as a
going concern. If we conclude that
a material uncertainty exists, we
are required to draw attention in
our report to the related disclosures
in the financial statements or, if
such disclosures are inadequate,
to modify the auditor’s opinion.
Our conclusions are based on the
audit evidence obtained up to the
date of our report. However, future
events or conditions may cause the
Group or the Company to cease to
continue as a going concern.
A description of our evaluation of
management’s assessment of the
ability to continue to adopt the
going concern basis of accounting,
Independent
auditor’s report to the
members of Flowtech
Fluidpower plc
55
and the key observations arising
with respect to that evaluation is
included in the Key Audit Matters
section of our report.
In our evaluation of the directors’
conclusions, we considered the
inherent risks associated with the
Group’s and the Company’s business
model including effects arising from
macro-economic uncertainties
such as overall UK macro-economic
growth levels and the risk of
recession on consumer demand,
we assessed and challenged the
reasonableness of estimates made
by the directors and the related
disclosures and analysed how those
risks might affect the Group’s and
the Company’s financial resources
or ability to continue operations over
the going concern period.
In auditing the financial statements,
we have concluded that the
directors’ use of the going
concern basis of accounting in
the preparation of the financial
statements is appropriate.
Based on the work we have
performed, we have not identified
any material uncertainties relating
to events or conditions that,
individually or collectively, may cast
significant doubt on the Group’s and
the Company’s ability to continue as
a going concern for a period of at
least twelve months from when the
financial statements are authorised
for issue.
Our responsibilities and the
responsibilities of the directors
with respect to going concern are
described in the relevant sections of
this report.
Overview of our audit approach
Overall materiality:
Group: £536,410, which represents 0.5% of the Group’s total revenue.
Company: £402,308, which represents 0.4% of the Company’s total assets, Company
component materiality has been capped at an amount less than Group materiality for Group
audit purposes.
Key audit matters were identified as:
• Carrying value of the Group’s goodwill (same as previous year); and
• Provision for impairment of inventories (same as previous year); and
• Carrying value of investments in subsidiaries (same as previous year); and
• Valuation of acquired intangibles (new in the current year); and
• Going Concern (new in the current year).
We have not reported improper revenue recognition - sale of goods as a key audit matter given
the relative lack of judgment in revenue recognition.
We have performed audits of the financial information using component performance
materiality (full-scope audits) for Fluidpower Group UK Limited and Fluidpower Group Services
UK Limited.
We have performed specific audit procedures on the financial information of Flowtech
Fluidpower Plc, Fluidpower Shared Services Limited and Hydroflex Hydraulics Group BV.
In total our audit procedures covered 89% of the Group’s total assets, 81% of the Group’s
revenue and 87% of the Group’s inventories.
Materiality
Scoping
Key audit
matters
Independent auditors report
Our approach to the audit
56
Annual Report and Accounts for the year end December 2024
Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit
of the financial statements of the
current period and include the most
significant assessed risks of material
misstatement (whether or not due
to fraud) that we identified. These
matters included those that had the
greatest effect on: the overall audit
strategy; the allocation of resources
in the audit; and directing the efforts
of the engagement team. These
matters were addressed in the
context of our audit of the financial
statements as a whole, and in
forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
In the graph below, we have
presented the key audit matters,
significant risks and other risks
relevant to the audit.
Low
High
Extent of management judgement
Potential
financial
statement
impact
High
Key audit matters
Significant risk
Other risk
Description
Disclosures
Audit
response
Our results
KAM
Valuation
of acquired
intangibles
Revenue
recognition
Cost of sales
Provision for
impairment of
inventories
Carrying value
of investments
in subsidiaries
Carrying value
of the Group’s
goodwill
Management
overwrite of
controls
Separately
disclosed items
Inventories
Intercompany
receivables
Trade payables
and accruals
Trade of
receivables
Cash and cash
equivalents
Going
concern
57
Independent auditors report
Key Audit Matter – Group
Carrying value of the Group’s
goodwill
We identified valuation of goodwill
as one of the most significant
assessed risks of material
misstatement due to error.
We have pinpointed the significant
risk in relation to the carrying value
of goodwill to the Great Britain and
Benelux Groups of CGUs in respect
of the valuation and allocation
assertion. There is an increased
risk that goodwill held by the Group
relating to the CGUs is impaired
due to the sensitivity to changes in
the assumptions underpinning the
forecasts and discount rate.
Under International Accounting
Standard (IAS) 36 ‘Impairment of
Assets’, management is required
to assess at the end of each
reporting period whether there is
any indication that an asset may be
impaired and to perform an annual
assessment whether the Group’s
goodwill within an operational
segment is impaired.
The process for assessing whether
impairment of assets exists under
IAS 36 is complex. Management
use an expert to prepare
impairment models to assess the
recoverable amount. Calculating
value in use, through forecasting
cash flows related to CGUs and
the determination of the CGUs,
appropriate discount rate and other
assumptions to be applied can be
highly judgemental and subject
to management bias or error. The
selection of certain inputs into
the cash flow forecasts can also
significantly impact the results of
the impairment assessment.
How our scope addressed
the matter – Group
In responding to the key audit
matter, we performed the following
audit procedures:
• Assessed the competence,
capabilities and objectivity of
the management’s expert used
by the Group;
• Assessed the mechanical
accuracy of the impairment model
and the methodology applied
by management for consistency
with the requirements of IAS
36, including their associated
sensitivity analysis and ensuring
that forecasts were approved by
the Board of Directors;
• Obtained management’s
assessment over carrying value
and value in use, understood
and challenged sensitivities
performed;
• Tested the accuracy of
management’s forecasting
through a comparison of prior
forecasts to actual data;
• Analysed and challenged the
appropriateness of management’s
assumptions, including
comparisons to external sector
data, and sensitivities relating
to the calculations of the value
in use of operational segments
and estimated future cash flows,
including the growth rate and
discount rate used to assess the
level of headroom;
• Assessed management’s sensitivity
analysis to understand the impact
of any reasonably possible changes
in assumptions, determining their
impact on the carrying value of the
intangible assets;
• Obtained and challenged
management’s assessment of
groups of CGUs and allocation
of central costs, including the
reasonableness of any changes
in CGUs;
• Ascertained the extent to which
a change in these assumptions,
both individually or in aggregate,
would result in a goodwill
impairment, and considered
the likelihood of such events
occurring. We also considered the
sufficiency and appropriateness of
disclosures included in the Group’s
consolidated financial statements
regarding such events;
• Used our internal valuation
specialists to analyse and
challenge management’s value
in use calculations by comparing
it to market capitalisation of the
Group and enterprise valuations
from recent sector transactions;
• Used our internal valuation
specialists to inform our
challenge of management,
ensuring that the assumptions
used within the calculation of
Weighted average cost of capital
(WACC) and growth rate, are
reasonable and consistent with
other similar Groups; and
• Assessed whether the Group’s
disclosures with respect to the
impairment or lack of impairment of
Group goodwill are adequate and
the key assumptions are disclosed.
Relevant disclosures
in the Annual Report
• Financial statements:
Note 2.9 Accounting policies,
Intangible assets, Goodwill; and
Note 10, Goodwill
Our results
Based on our audit work we
found the assumptions used in
management’s impairment model
were appropriate. We did not
identify any material misstatements
with respect to the carrying value of
the Group’s goodwill in accordance
with IAS 36.
58
Annual Report and Accounts for the year end December 2024
Provision for impairment
of inventories
We identified provision for impairment
of inventories as one of the most
significant assessed risks of material
misstatement due to error.
The Group’s total inventory as at
31 December 2024 is £29,263,000
(2023: £32,009,000), which is
recorded net of a provision of
£1,863,000 (2023: £1,891,000).
Inventory management is one of the
key challenges facing management
and one of the main determinants of
the Group’s underlying performance.
The provision for impairment of
inventories is calculated based
on historical sales trends, and
management’s estimation of
recoverability of inventory on
hand. Key assumptions made by
management include those in
relation to expected future sales
and levels of excess inventory.
Determining the provision for
impairment of inventories is
complex, and involves a high degree
of estimation uncertainty.
In responding to the key audit
matter, we performed the following
audit procedures:
• Assessed whether the Group’s
accounting policy for impairment
of inventories is in accordance
with the financial reporting
framework, including IAS 2
‘Inventories’;
• Considered whether the Group’s
inventory provisions have been
recognised in accordance with
the Group’s accounting policies;
• Challenged the appropriateness
of the provision percentage
applied to excess stock and
performed a sensitivity analysis
on the assumptions used in
management’s adjustments;
• Agreed the integrity of the
underlying data used in the
calculation of the inventory
provisions to sales data;
• Assessed sales made at a loss,
both during the financial period
and subsequent to the year end;
• Assessed the historical accuracy
of prior period’s provisioning;
• On a sample basis, we vouched
most recent sales to determine if
inventory is held at lower of cost
or net realisable value; and
• Considered the suitability
of the inventory provision,
including comparisons to
competitors, re-performance of
the calculation and considering
historical performance relating
to inventories. We developed
an auditor’s range in order to
evaluate management’s inventory
provision and related disclosures
about estimation uncertainty.
Relevant disclosures
in the Annual Report
• Financial statements: Note 2.10,
Accounting policies, Inventories;
and Note 15, Inventories
Our results
Based on our audit work we
have not identified any material
misstatements relating to the
provision for inventories.
Valuation of acquired intangibles
We identified valuation of acquired
intangibles as one of the most
significant assessed risks of material
misstatement due to error.
The trade and assets of Thorite
were acquired in August 2024.
Given the complexity and estimation
involved in the calculation to
estimate the fair value of acquired
intangible assets, the audit team
deem this to be a key audit matter
which requires audit team effort to
ensure the valuation of intangibles is
appropriate.
In responding to the key audit
matter, we performed the following
audit procedures:
Reviewed sale and purchase
agreement (SPA) and vouched key
terms,
Assessed the competence,
capabilities and objectivity of the
management’s expert used by the
Group;
• Assessed the mechanical
accuracy of the intangible
asset valuation model and
the methodology applied by
management for consistency with
the accounting standards;
• Used our internal valuation
specialists to analyse and
challenge management’s
valuation of intangible assets;
• Challenged and assessed the
amortisation period of intangibles
and charge posted within the
year; and
• Challenged the key assumptions
in the underlying forecasts used
for valuation of intangibles.
Relevant disclosures in the Annual
Report
Financial statements: Note 2.10,
Accounting policies, Inventories; and
Note 15, Inventories
Our results
Based on our audit work, we did not
identify any material misstatements
related to the valuation of acquired
intangibles resulting from the
acquisition of Thorite’s trade and
assets.
Going concern
We identified going concern as one
of the most significant assessed
risks of material misstatement due
to error.
FY24 was a challenging trading year
for the Group and, as a result, the
last twelve month (LTM) EBITDA
figure was lower than forecasted
causing reduced headroom on
banking covenants and liquidity.
As a result, the going concern
work required a greater allocation
of resources in the audit and
increased effort from the audit team
to gain assurance.
In responding to the key audit
matter, we performed the following
audit procedures:
• Obtained management’s base case
scenario for the going concern
period until December 2026;
• Compared inputs used in the
going concern model to current
year actuals;
• Performed arithmetic checks
on management’s going
concern model to assess the
mathematical accuracy of the
going concern model;
• Challenged and obtained
supporting evidence for key
59
assumptions such as revenue
growth, working capital and cash
flow assumptions, which will have
been approved by the Board;
• Assessed the reasonableness
of management’s forecasts
and downside sensitivity by
comparing to external market
data and historic performance;
• Obtained management’s reverse
stress test, understood and
challenged the sensitivities
applied which represent
management’s assessment of
uncertainties present;
• Considered management’s
historic forecasting accuracy by
comparing previous forecasts
to actual results achieved and
considered the impact of this on
the base case forecasts produced;
• Corroborated the existence of
the Group’s loan facilities and
related covenant requirements
for the period covered by
management’s forecasts;
• Met with a representative of the
Group’s external funder to discuss
their funding arrangements and
support for the Group;
• Assessed the accuracy of
covenant calculations within the
Group’s forecasts by confirming
to the debt agreements; and
• Compared post year end results
achieved to those forecasted
to determine if the business is
trading in line with forecasts.
• Considered and inquiring
whether management and
those charged with governance
are aware of events or
conditions beyond the period of
management’s assessment that
may cast significant doubt on the
entity’s ability to continue as a
going concern.
• Assessing the adequacy of going
concern disclosures within the
financial statements.
Relevant disclosures
in the Annual Report
• Financial statements: Note 2.10,
Accounting policies, Inventories;
and Note 15, Inventories
Our results
Based on our audit work, the going
concern basis of accounting is
deemed appropriate.
Key Audit Matter –
company
Recoverability of carrying value
of investments in subsidiaries
We identified the carrying value of
investments in subsidiaries as one
of the most significant assessed
risks of material misstatement due
to error.
The Company statement of financial
position includes investments in
subsidiaries of £24,804,000, (2023:
£59,685,000).
We have focused on this area
due to the size of the investment
balance and the higher estimation
uncertainty in determining the future
cashflows to support the balance.
There is a risk that the carrying
value of investments may be
overstated. The process for
assessing whether impairment exist
under IAS 36 ‘Impairment of Assets’
is complex and there is significant
judgement in forecasting future
cashflows and therefore assessing
the value.
Management has performed an
assessment of the recoverable
amount of the investment and
compared this to the carrying
value using the same cash flow
methodology applied in the
impairment test for goodwill
described above.
The judgements made by
management in respect of the
impairment review are subject to
significant measurement uncertainty.
How our scope addressed
the matter– company
In responding to the key audit
matter, we performed the following
audit procedures:
• In responding to the key audit
matter, we performed the
following audit procedures:
• Assessed management’s
impairment review including
comparing management’s
forecasts with the latest Board-
approved budget;
• Assessed the accuracy of
management’s forecasting through
a comparison of historical data to
actual results and projections for
following periods;
• Assessed the competence,
capabilities and objectivity of the
management expert used by the
Company;
• Assessed the appropriateness of
the methodology and discount
rate provided by management’s
expert and used in management’s
impairment review;
• Challenged the assumptions
included within management’s
calculation, which included gaining
an understanding of the key
factors and judgements applied in
determining future forecast results
including the growth rate and
discount rates;
• Assessed the accuracy of
management’s forecasts by
comparing forecasts to
historical results;
• Considered any indicators of
impairment such as market
capitalisation and current
financial performance;
• Performed sensitivity analysis on
key assumptions to understand
the potential impact on headroom.
This included sensitising the
discount rate applied to the
future cash flows, and the short-
term growth rates and operating
income forecast; and
• Assessed the adequacy of
the disclosures in the financial
statements in accordance with
the requirements of IAS 36
‘Impairment of Assets’.
Relevant disclosures
in the Annual Report
• Financial statements:
Note B, Accounting policies,
Impairment of investments; and
Note I, Investment
Our results
Based on our audit testing, we
did not identify any material
misstatements in respect of the
recoverability of the carrying value
of investments in subsidiaries.
Independent auditors report
60
Annual Report and Accounts for the year end December 2024
Materiality measure
Group
Company
Materiality for financial statements as
a whole
We define materiality as the magnitude of misstatement in the financial statements that, individually or
in the aggregate, could reasonably be expected to influence the economic decisions of the users
of these financial statements. We use materiality in determining the nature, timing and extent of our
audit work.
Materiality threshold
£536,410 (2023: £560,000), which represents 0.5%
of the Group’s revenue.
The range of component performance materialities
used across the Group was between £155,399 to
£313,800.
£402,308 (2022: £560,000), which represents
0.4% of the Company’s total assets.
Company component materiality has been
capped at an amount less than Group
materiality for Group audit purposes.
Significant judgements made by auditor
in determining materiality
In determining materiality, we made the following
significant judgements:
• We determined that revenue was the most
appropriate benchmark for the Group due to it being
a key performance indicator of the Group (as part
of the Sales growth KPI) and providing a consistent
year on year basis for determining materiality as it is
less volatile than the earnings for the Group.
• A market-based measurement percentage was
chosen which reflected our knowledge of the
business from the prior year audit, as well as our
risk assessment of the business.
• Materiality for the current year is lower than the
level that we determined for the year ended 31
December 2023 to reflect the reduction in revenue
across the Group.
In determining materiality, we made the
following significant judgements:
• We determined the Company’s total assets
to be the most appropriate benchmark as the
Company does not trade and largely holds
investments in subsidiary undertakings and
the external borrowings.
• Materiality for the current year is lower than
the level that we determined for the year
ended 31 December 2023 because we have
applied a lower cap with reference to Group
materiality than what was applied last year.
Performance materiality used to
drive the extent of our testing
We set performance materiality at an amount less than materiality for the financial statements as a
whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a whole.
Performance materiality threshold
£348,667 (2023: £336,000), which is 65% (2023:
60%) of financial statement materiality.
The range of component performance materialities
used across the Group was between £155,399 to
£313,800.
£261,500 (2023: £392,000, which is 65% (2023:
70%) of financial statement materiality.
Company component performance materiality
has been capped at an amount less than Group
performance materiality for Group audit purposes.
Significant judgements made by
auditor in determining performance
materiality
In determining performance materiality, we made
the following significant judgements:
• Our experience with auditing the financial
statements of the Group in previous years,
including the level of uncorrected misstatements
and low number of significant control deficiencies
identified in the prior year.
• For each component in scope for our Group audit,
we allocated a performance materiality that is less
than our overall Group performance materiality.
• Based on the extent of disaggregation if financial
information across components, including the
relative risk and size of a component to the Group, an
appropriate component performance materiality was
selected
In determining performance materiality, we
made the following significant judgements:
• Our risk assessment procedures did not identify
any significant changes in business objectives
and strategy of the Company; and
• Our experience with auditing the financial
statements of the Company in previous
years, including the level of uncorrected
misstatements and low number of control
deficiencies in the prior year.
Specific materiality
We determine specific materiality for one or more particular classes of transactions, account balances
or disclosures for which misstatements of lesser amounts than materiality for the financial statements
as a whole could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
Specific materiality
We determined a lower level of specific materiality
for the following areas:
• Directors’ remuneration,
• Auditor’s remuneration.
We determined a lower level of specific
materiality for the following areas:
• Directors’ remuneration,
• Auditor’s remuneration.
Communication of misstatements
to the Audit Committee
We determine a threshold for reporting unadjusted differences to the Audit Committee.
Threshold for communication
£26,821 (2023: £28,000), which represents 5% of
financial statement materiality, and misstatements
below that threshold that, in our view, warrant
reporting on qualitative grounds.
£20,115 (2023: £28,000), which represents
5% of financial statement materiality, and
misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in
forming the opinion in the auditor’s report.
Materiality was determined as follows:
61
The graph below illustrates how performance materiality and the range of component performance
materiality interacts with our overall materiality and the threshold for communication to the Audit Committee:
FSM: Financial statement materiality, PM: Performance materiality, RoPM: Range of performance
materiality at 5 components, TfC: Threshold for communication to the audit committee.
Overall materiality - Group
Overall materiality - Company
Revenue £107,282,000
FSM £536,410 0.5%
FSM £536,310
(0.5% of Revenue)
FSM £402,308
(0.7% of total assets)
PM £355,102
(65% of FSM)
PM £261,500
(65% of FSM)
RoPM £155,399
to £313,800
TfC £20,115
(5% of FSM)
Total assets £60,449,941
FSM £402,308 0.7%
Independent auditors report
TfC £26,821
(5% of FSM)
62
Annual Report and Accounts for the year end December 2024
An overview of the
scope of our audit
We performed a risk-based audit
that requires an understanding of the
Group’s and the Company’s business
and in particular matters related to:
Understanding the Group, its
components, their environments,
and its system of internal control
including common controls
The engagement team obtained
an understanding of the Group and
its environment, including common
controls, and assessed the risks of
material misstatement at the Group
level; and
The engagement team further
considered the effect of the
Group organisational structure on
the scope of the audit, including
common processes and controls
and used this to inform our
assessment of risk.
Identifying components at which to
perform audit procedures
In order to address the risks
identified, the engagement
team performed an evaluation
on components to identify
significant components. We have
determined components in scope
for further audit procedures based
on individual risk of material
misstatement and due to the nature
and size of total assets, revenue,
and inventories at the component
being of financial significant to one
or more items required to be in
scope.
Type of work to be performed
on financial information of the
Company and other components
(including how it addressed the
key audit matters)
We performed full scope audits using
component performance materiality
on the financial information of the
components Fluidpower Group
UK Limited and Fluidpower Group
Services Limited;
We performed specific audit
procedures on certain balances and
transactions of Flowtech Fluidpower
Plc, Hydroflex Hydraulics Group BV
and Fluidpower Shared Services
Limited;
We performed analytical procedures
on the financial information
of Fluidpower MIP Limited,
Flowtechnology Benelux Limited and
Flowtech Fluidpower Ireland Limited.
We identified key audit matters of
the Group, which were carrying
value of goodwill, provision for
impairment of inventories, carrying
value of investment in subsidiaries,
valuation of acquired intangibles
and going concern. The audit
procedures performed in respect
of these have been included within
the key audit matters section of our
report.
Performance of our audit
Components at which full-scope
audit was performed made up 80%
of the Group’s revenue, 87% of
the Group’s assets and 87% of the
Group’s inventories. Components
at which specific-scope audit and
specified audit procedures were
performed made up 0% of the
Group’s revenue, 2% of Group’s
assets and 0% of the Group’s
inventories;
The total percentage coverage of
full-scope audit and specified audit
procedures were 81% of the Group’s
revenue, 89% of the Group’s assets
and 87% of the Group’s inventories;
For the remaining components we
performed analytical procedures on
their financial information; and
Testing of the consolidation process,
including re-performance of
management’s calculations.
The components within the scope of
further audit procedures accounted
for the following percentages of the
Group’s results, including the key
audit matters identified:
Audit approach
No. of components
% coverage
total assets
% coverage
revenue
% coverage
inventories
Full-scope audit
2 (2023: 2)
87% (2023: 87%)
81% (2023: 80%)
87% (2023: 87%)
Specific scope procedures
3 (2023: 3)
2% (2023: 2%)
0% (2023: 0%)
0% (2023: 0%)
Full scope procedures and specific
scope procedures coverage
5 (2023: 5)
89% (2023: 89%)
81% (2023: 80%)
87% (2023: 87%)
Analytical procedures
3 (2023: 3)
11% (2023: 11%)
19% (2023: 20%)
13% (2023: 13%)
Total
8 (2023: 8)
100%
100%
100%
63
Changes in approach
from previous period
• Specific audit procedures for
Flowtech Fluidpower Ireland Limited
did not include cash and cash
equivalents owing to the financial
insignificance in the context of the
Group as a whole; and
• Specific audit procedures for
Hydroflex Hydraulics Group
BV included cash and cash
equivalents owing to the financial
significance in the context of the
Group as a whole.
Other information
The other information comprises the
information included in the annual
report, other than the financial
statements and our auditor’s
report thereon. The directors are
responsible for the other information
contained within the annual
report. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our
report, we do not express any form
of assurance conclusion thereon.
Our responsibility is to read the
other information and, in doing
so, consider whether the other
information is materially inconsistent
with the financial statements or our
knowledge obtained in the audit or
otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required
to determine whether there is a
material misstatement in the financial
statements themselves. If, based
on the work we have performed,
we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
We have nothing to report in
this regard.
Our opinion on other
matters prescribed by the
Companies Act 2006 is
unmodified
In our opinion, based on the work
undertaken in the course of the audit:
the information given in the strategic
report and the directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
the strategic report and the directors’
report have been prepared in
accordance with applicable legal
requirements.
Matter on which we are
required to report under
the Companies Act 2006
In the light of the knowledge and
understanding of the Group and the
Company and their environment
obtained in the course of the audit,
we have not identified material
misstatements in the strategic
report or the directors’ report.
Matters on which we
are required to report by
exception
We have nothing to report in
respect of the following matters in
relation to which the Companies Act
2006 requires us to report to you if,
in our opinion:
• adequate accounting records
have not been kept by the
Company, or returns adequate for
our audit have not been received
from branches not visited by us;
or
• the Company financial
statements are not in agreement
with the accounting records and
returns; or
• certain disclosures of directors’
remuneration specified by law are
not made; or
• we have not received all the
information and explanations we
require for our audit.
Responsibilities of
directors
As explained more fully in the
Directors Report [**set out on
pages 50-52**], the directors are
responsible for the preparation of
the financial statements and for
being satisfied that they give a true
and fair view, and for such internal
control as the directors determine is
necessary to enable the preparation
of financial statements that are
free from material misstatement,
whether due to fraud or error.
In preparing the financial
statements, the directors are
responsible for assessing the
Group’s and the Company’s ability
to continue as a going concern,
disclosing, as applicable, matters
related to going concern and
using the going concern basis of
accounting unless the directors
either intend to liquidate the
Group or the Company or to cease
operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
for the audit of the
financial statements
Our objectives are to obtain
reasonable assurance about
whether the financial statements
as a whole are free from material
misstatement, whether due to
fraud or error, and to issue an
auditor’s report that includes our
opinion. Reasonable assurance
is a high level of assurance but
is not a guarantee that an audit
conducted in accordance with ISAs
(UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.
Irregularities, including fraud, are
instances of non-compliance with
laws and regulations. The extent to
which our procedures are capable
of detecting irregularities, including
fraud, is detailed below:
• We obtained an understanding
of the legal and regulatory
frameworks applicable to the
Group and the Company and the
industry in which they operate.
We determined that the following
laws and regulations were most
significant; the Companies
Act 2006 and UK-adopted
international accounting standards
(for the Group), the Companies
Act 2006 and Financial Reporting
Standard 101 ‘Reduced Disclosure
Framework’ (for the Company),
Independent auditors report
64
Annual Report and Accounts for the year end December 2024
and the Quoted Companies
Alliance (QCA) Corporate
Governance Code;
• We obtained an understanding of
how the Company and the Group
are complying with those legal
and regulatory frameworks by
making inquiries of management,
those responsible for legal and
compliance procedures and
the company secretary. We
corroborated our inquiries through
our review of board minutes and
papers provided to the Audit
Committee;
• We assessed the susceptibility of
the Company’s and the Group’s
financial statements to material
misstatement, including how fraud
might occur. Audit procedures
performed by the Group
engagement team included:
◦Assessing the design and
implementation of controls
management has in place to
prevent and detect fraud;
◦Obtaining an understanding
of how those charged with
governance considered and
addressed the potential for
override of controls or other
inappropriate influence over
the financial reporting process;
◦Challenging assumptions
and judgments made by
management in its significant
accounting estimates;
◦Identifying and testing journal
entries, in particular journal
entries determined to be
large or relating to unusual
transactions; and
◦Making inquiries, in respect
of fraud, of those outside the
finance team, including key
management and the internal
process audit team.
• These audit procedures were
designed to provide reasonable
assurance that the financial
statements were free from fraud
or error. The risk of not detecting
a material misstatement due to
fraud is higher than the risk of
not detecting one resulting from
error and detecting irregularities
that result from fraud is inherently
more difficult than detecting
those that result from error, as
fraud may involve collusion,
deliberate concealment, forgery
or intentional misrepresentations.
Also, the further removed
non-compliance with laws and
regulations is from events and
transactions reflected in the
financial statements, the less likely
we would become aware of it;
• The engagement partner’s
assessment of the
appropriateness of the collective
competence and capabilities
of the engagement team
included consideration of the
engagement team’s knowledge
of the industry in which the client
operates, and the understanding
of, and practical experience
with, audit engagements of a
similar nature and complexity
through appropriate training and
participation; and
• The engagement team’s
discussions in respect of
potential non-compliance with
laws and regulations and fraud
included the risk of fraud in
revenue recognition.
A further description of our
responsibilities for the audit of the
financial statements is located on
the Financial Reporting Council’s
website at: www.frc.org.uk/
auditorsresponsibilities. This
description forms part of our
auditor’s report.
Use of our report
This report is made solely to the
Company’s members, as a body, in
accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our
audit work has been undertaken
so that we might state to the
Company’s members those matters
we are required to state to them
in an auditor’s report and for no
other purpose. To the fullest extent
permitted by law, we do not accept
or assume responsibility to anyone
other than the Company and the
Company’s members as a body, for
our audit work, for this report, or for
the opinions we have formed.
Michael Lowe
Senior Statutory Auditor
for and on behalf of Grant
Thornton UK LLP, Statutory Auditor,
Chartered Accountants
Manchester. 8 April 2025
65
Consolidated Statement of Comprehensive Income
Note
2024
£000
2023
£000
Continuing operations
Revenue
3
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
3
(27,888)
(16,356)
Total administrative expenses
(62,084)
(47,096)
Operating profit/(loss)
4
(25,238)
(10,367)
Financial expenses
6
(1,839)
(1,735)
Loss from continuing operations before tax
3
(27,077)
(12,102)
Taxation
7
671
(875)
Loss from continuing operations
(26,406)
(12,977)
Loss profit 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
9
(42.23p)
(21.10p)
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 Income Statement
For the year ended 31 December
Financial report
66
Annual Report and Accounts for the year end December 2024
Consolidated Statement of Financial Position
The financial statements on pages 66-108 were approved by the Board of Directors on 8 April 2025 and were signed on its behalf by:
Russell Cash, Chief Financial Officer, Company number: 09010518
Note
2024
£000
2023
£000
Assets
Non-current assets
Goodwill
10
14,996
40,066
Other intangible assets
11
3,776
2,529
Right-of-use assets
21
4,806
4,829
Property, plant and equipment
13
7,546
7,822
Total non-current assets
31,124
55,246
Current assets
Inventories
15
29,263
32,009
Trade and other receivables
16
22,740
23,725
Prepayments
1,052
856
Cash and cash equivalents
17
1,839
5,184
Total current assets
54,894
61,774
Liabilities
Current liabilities
Lease liability
18,21
1,694
1,695
Trade and other payables
19
20,866
21,558
Tax payable
228
767
Total current liabilities
22,788
24,020
Net current assets
32,106
37,754
Non-current liabilities
Interest-bearing borrowings
18
16,913
19,915
Lease liability
18, 21
3,743
3,822
Provisions
20
179
330
Deferred tax liabilities
14
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
23
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
67
Financial report
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
Total transactions with owners
-
-
-
-
-
-
-
(1,289)
(1,289)
Balance at 31 December 2022
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
68
Annual Report and Accounts for the year end December 2024
Consolidated Statement of Cash Flows
Note
2024
£000
2023
£000
Cash flow from operating activities
Net cash from operating activities
25
8,706
8,202
Cash flow from investing activities
Payment for acquisition
24
(832)
-
Repayment of Credit facility from acquisition
24
(1,694)
-
Acquisition of property, plant and equipment
13
(1,547)
(2,092)
Acquisition of intangible assets
11
(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
8
(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
17
1,839
5,184
Net Debt
15,074
14,731
69
Financial report
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.
70
Annual Report and Accounts for the year end December 2024
Notes to the Consolidated
Financial Information
1. General information
The principal activity of Flowtech
Fluidpower plc (the ‘Company’)
and its subsidiaries (together,
the ’Group’) is the distribution
of engineering components and
assemblies, concentrating on the
fluid power industry. The Company
is a public limited company,
incorporated and domiciled in the
United Kingdom. The address of
its registered office is Bollin House,
Bollin Walk, Wilmslow, SK9 1DP. The
registered number is 09010518.
News updates, regulatory news, and
financial statements can be viewed and
downloaded from the Group’s website,
www.flowtechfluidpower.com.
Copies can also be requested from:
The Company Secretary, Flowtech
Fluidpower plc, Bollin House, Bollin
Walk, Wilmslow, SK9 1DP. Email:
info@flowtechfluidpower.com.
2. Accounting policies
2.1 Basis of preparation
The consolidated financial
statements of the Group have been
prepared in accordance with UK
adopted international accounting
standards and the Companies
Act 2006. The Company financial
statements have been prepared in
accordance with Financial Reporting
Standard 101 ‘Reduced disclosure
framework’ (FRS 101).
The consolidated financial
statements have been prepared on
a going concern basis and prepared
on the historical cost basis.
The consolidated financial statements
are presented in sterling and have
been rounded to the nearest
thousand (£’000). The functional
currency of the Company is sterling.
The preparation of financial
information in conformity with UK-
adopted international accounting
standards requires management to
make estimates and assumptions
that affect the reported amounts
of assets and liabilities at the date
of the financial statements and
the reported amounts of revenues
and expenses during the reporting
period. Although these estimates
are based on management’s best
knowledge of the amount, event
or actions, actual events ultimately
may differ from those estimates.
New standards and interpretations
From 1 January 2023 the following
became effective and were adopted
by the Company:
• Amendments to IAS 1 and
IFRS Practice Statement 2 –
Disclosure of Accounting Policies
(effective 1 January 2023)
• Amendments to IAS 8 – Definition
of Accounting Estimates
(effective 1 January 2023)
• Amendments to IAS 12 – Deferred
Tax related to Assets and Liabilities
arising from a Single Transaction
(effective 1 January 2023)
• Amendments to IAS 12 –
International tax reform
- pillar two model rules
(effective 1 January 2023)
• IFRS 17 – Insurance Contracts,
as amended in December 2021
(effective 1 January 2023)
Their adoption did not have
a material effect on the Company’s
profit for the year or equity.
New standards, amendments and
interpretations issued but not yet
effective and not early adopted
• Amendments to IAS 1 – Non-
current Liabilities with Covenants
(effective 1 January 2024)
• Amendments to IFRS 16 – Lease
Liability in a Sale and Leaseback
(effective 1 January 2024)
• Amendments to IAS 7 and IFRS
7 - Supplier finance (effective 1
January 2024)
• Amendments to IAS 21 - Lack
of Exchangeability (effective 1
January 2025).
It is not considered that the above
standards and amendments will have
a significant effect on the results or
net assets of the Company.
The accounting policies set out
below have, unless otherwise
stated, been applied consistently
to all periods presented in the
consolidated financial statements.
2.2 Going concern
The financial statements are prepared
on a going concern basis which the
Directors believe to be appropriate for
the following reasons:
• The Group made a £25.1m
operating loss in 2024 (2023: Loss
£10.4m), and after adding back
separately disclosed items, this
represents an underlying operating
profit of £2.7m(2023: £5.9m)
• The Group is expecting to see
increased profitability in 2025; this
is supported by the quantum and
quality of the pipeline of enquiries
and an expectation of a return to
more favourable market conditions
• During the year the Group
acquired the business and assets
of Thorite; following steps taken
to improve gross margin and
to manage the cost base it is
pleasing to see the business
already contributing positive
EBITDA to the results.
• The Group maintains a strong
relationship with its bankers.
Given the level of profitability
achieved in 2024, in particular
the second half of 2024 it was
necessary to agree a relaxation of
certain of the banking covenants
which covers the period up to
September 2025. The Group
expects to remain compliant with
all covenants throughout 2025
and beyond under base case and
severe downside scenarios.
• At the end of 2024 the Group’s
Net Debt was £15.1 million (£9.9
million within the aggregate
banking facilities which include
a £5.0 million overdraft facility).
Whilst the overdraft facility has
been in place for many years
71
Financial report
it is technically repayable on
demand, The forecasts and
the sensitivities subsequently
applied show no reliance on the
facility during the going concern
assessment period.
The Directors have prepared forecasts
covering the period to December
2026 and this is our going concern
assessment period. Naturally, these
forecasts include a number of key
assumptions notably relating, inter
alia, to revenue, margins, costs and
working capital balances.
In any set of forecasts there are
inherent risks relating to each
of these assumptions. If future
trading performance significantly
underperformed expectations,
management believe there would be
the ability to mitigate the impact of this
by careful management of the Group’s
cost base and working capital and that
this would assist in seeking to ensure
all bank covenants were complied with
and the business continued to operate
well within its banking facilities.
We have performed stress testing,
based on revenue reductions, and
are satisfied that the Group is able to
remain Covenant compliant in these
situations and without the need for
any reliance on the £5m overdraft
facility. The Directors view the set of
circumstances required for any breach
of banking covenants to crystalise
as highly unlikely and as such, not
reasonably plausible scenarios.
We acknowledge that recent
announcements with regards to trade
tariffs could add to the volatility and
unpredictability of market conditions.
We believe the impact that this could
have is adequately accommodated
within the stress testing scenarios
which have been considered and
as such this does not change any
conclusions previously reached.
The Directors believe the business will
continue to operate within its agreed
banking facilities and comply with all
banking covenants. As such the Group
therefore continues to adopt the going
concern basis is preparing its financial
statements.
2.3 Basis of consolidation
On 24 April 2014, the Company was
incorporated under the name Flowtech
Fluidpower Limited. On 7 May 2014,
Flowtech Fluidpower Limited acquired
the entire issued share capital of
Fluidpower Shared Services (formerly
Flowtech Holdings Limited) via a
share for share exchange with the
Shareholders of Fluidpower Shared
Services Limited. On 7 May 2014,
Flowtech Fluidpower Limited was re-
registered as a public limited company
with the name Flowtech Fluidpower
plc. Following the share for share
exchange referred to above, Flowtech
Fluidpower plc became the ultimate
legal parent of the Group.
In the absence of an IFRS which
specifically deals with similar
transactions, management judge it
appropriate to refer to other similar
accounting frameworks for guidance
in developing an accounting policy
that is relevant and reliable. The
Directors consider the share for share
exchange transaction to be a Group
reconstruction rather than a business
combination in the context of IFRS
3 (revised), ‘Business Combinations’,
which has been accounted for
using merger accounting principles.
Therefore, although the share for
share exchange did not occur until 7
May 2014, the consolidated financial
statements of Flowtech Fluidpower
plc are presented as if the Flowtech
Group of companies had always been
part of the same Group.
Accordingly, the following accounting
treatment was applied in respect of
the share for share exchange:
1. The assets and liabilities of
Fluidpower Shared Services
Limited and its subsidiaries were
recognised in the consolidated
financial statements at the pre-
combination carrying amounts,
without restatement to fair value,
and
2. The retained losses and other
equity balances recognised in the
consolidated financial statements
for the year ended 31 December
2013 reflect the retained losses
and other equity balances of
Fluidpower Shared Services
Limited and its subsidiaries
recorded before the share for
share exchange. However, the
equity structure (share capital
and share premium balances)
shown in the consolidated
financial statements reflects
the equity structure of the legal
parent (Flowtech Fluidpower plc),
including the equity instruments
issued under the share for
share exchange. The resulting
difference between the parent’s
capital and the acquired Group’s
capital has been recognised as
a component of equity being the
‘merger reserve’.
3. The Company had no significant
assets, liabilities or contingent
liabilities of its own at the time of
the share for share exchange and
no such consideration was paid.
Subsidiaries
The Group’s financial statements
consolidate those of the Parent
Company and all of its subsidiaries
as of 31 December 2024. The Parent
controls a subsidiary if it is exposed, or
has rights, to variable returns from its
involvement with the subsidiary and
has the ability to affect those returns
through its power over the subsidiary.
All transactions and balances
between Group companies are
eliminated on consolidation,
including unrealised gains and
losses on transactions between
Group companies. Where unrealised
losses on intra-Group asset sales
are reversed on consolidation, the
underlying asset is also tested for
impairment from a Group perspective.
Amounts reported in the financial
statements of subsidiaries have been
adjusted where necessary to ensure
consistency with the accounting
policies adopted by the Group.
Profit or loss and other comprehensive
income of subsidiaries acquired
or disposed of during the year are
recognised from the effective date of
acquisition, or up to the effective date
of disposal, as applicable.
2.4 The Group’s leasing activities
and how these are accounted for
The Group leases various offices,
warehouses, and motor vehicles.
Rental contracts are typically made
for fixed periods of up to 12 years
but may have extension options as
described in (i) below. Lease terms
72
Annual Report and Accounts for the year end December 2024
are negotiated on an individual
basis and contain a wide range of
different terms and conditions. The
lease agreements do not impose
any covenants, but leased assets
may not be used as security for
borrowing purposes.
Assets and liabilities arising from
a lease are initially measured on
a present value basis. Leases
liabilities are secured on the assets
leased. Lease liabilities include the
net present value of the following
lease payments:
1. fixed payments (including in-
substance fixed payments), less
any lease incentives receivable;
2. variable lease payments that are
based on an index or a rate
3. amounts expected to be payable
by the lessee under residual
value guarantees
4. the exercise price of a purchase
option if the lessee is reasonably
certain to exercise that option,
and
5. payments of penalties for
terminating the lease, if the
lease term reflects the lessee
exercising that option.
The lease payments are discounted
using the interest rate implicit in
the lease. If that rate cannot be
determined, the lessee’s incremental
borrowing rate is used, being the
rate that the lessee would have to
pay to borrow the funds necessary
to obtain an asset of similar value in
a similar economic environment with
similar terms and conditions.
Right-of-use assets are measured at
cost comprising the following:
1. the amount of the initial
measurement of lease liability
2. any lease payments made at
or before the commencement
date less any lease incentives
received
3. any initial direct costs, and
4. restoration costs.
Payments associated with short-term
leases and leases of low-value assets
are recognised on a straight-line basis
as an expense in profit or loss. Short-
term leases are leases with a lease
term of 12 months or less. Low-value
assets comprise IT equipment and
small items of office furniture with a
value of less than £3,500.
There are no leases with variable
lease payments.
(i) Extension and
termination options
Extension and termination options
are included in a number of
property and equipment leases
across the Group. These terms
are used to maximise operational
flexibility in terms of managing
contracts. The majority of extension
and termination options held are
exercisable only by the Group and
not by the respective lessor.
Judgements in determining
the lease term
In determining the lease term,
management considers all facts
and circumstances that create an
economic incentive to exercise an
extension option, or not exercise a
termination option. Extension options
(or periods after termination options)
are only included in the lease term
if the lease is reasonably certain to
be extended (or not terminated). No
potential future cash outflows have
been included in the lease liability
because it is not reasonably certain
that the leases will be extended (or
not terminated). The assessment is
reviewed if a significant event or a
significant change in circumstances
occurs which affects this
assessment and that is within the
control of the lessee.
(ii) Residual value guarantees
To optimise lease costs during the
contract period, the Group sometimes
provides residual value guarantees in
relation to equipment leases.
Estimating the amount payable under
residual value guarantees
The Group initially estimates and
recognises amounts expected to
be payable under residual value
guarantees as part of the lease
liability. The amounts are reviewed,
and adjusted if appropriate, at the
end of each reporting period. At the
end of the reporting period, there
is no liability on account of residual
value guarantees.
2.5 Classification of financial
instruments issued by the Group
Financial instruments issued by the
Group are treated as equity only
to the extent that they meet the
following two conditions:
1. they include no contractual
obligations upon the Company
(or Group as the case may be)
to deliver cash or other financial
assets or to exchange financial
assets or financial liabilities with
another party under conditions
that are potentially unfavourable
to the Company (or Group), and
2. where the instrument will or may
be settled in the Company’s own
equity instruments, it is either a
non-derivative that includes no
obligation to deliver a variable
number of the Company’s
own equity instruments or is a
derivative that will be settled by
the Company’s exchanging a fixed
amount of cash or other financial
assets for a fixed number of its
own equity instruments.
To the extent that this definition is
not met, the proceeds of issue are
classified as a financial liability. Where
the instrument so classified takes
the legal form of the Company’s own
shares, the amounts presented in
these financial statements for called
up share capital and share premium
account exclude amounts in relation
to those shares.
2.6 Financial instruments
Non-derivative financial
instruments comprise trade and
other receivables, cash and cash
equivalents, loans and borrowings,
and trade and other payables.
Trade and other receivables
Trade and other receivables are
recognised initially at the transaction
price in accordance with IFRS 15.
The Group makes use of a simplified
approach in accounting for trade
losses in other receivables as well
as contract assets and records
the loss allowance as lifetime
expected credit losses. These
are the expected shortfalls in
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Financial report
contractual cashflows, considering
the potential for default at any
point during the life of the financial
instrument. In calculating, the
Group uses its historical experience,
external indicators and forward
looking information to calculate
the expected credit losses using
a provision matrix. The group
assesses impairment of trade
receivables on a collective basis
as they possess shared credit
risk characteristics they have
been grouped based on the days
past due. Refer to note 16 for the
movement in expected credit losses,
as well as the allocation based on
the ageing profile.
Trade and other payables
Trade and other payables are
recognised initially at fair value.
Subsequent to initial recognition
they are measured at amortised cost
using the effective interest method.
Derivative financial instruments
and hedging activities
The Group primarily uses forward
foreign currency contracts to
manage its exposure to fluctuating
foreign exchange rates. These
instruments are initially recognised
at fair value and are subsequently
remeasured at their fair value at
each Statement of Financial Position
date. Any gains or losses are
recognised though the Consolidated
Income Statement.
Cash and cash equivalents
Cash is defined as cash in hand
and on demand deposits. Cash
equivalents are defined as short-term
highly liquid investments with original
maturities of three months or less.
Interest-bearing borrowings
Interest-bearing borrowings are
recognised initially at fair value
less attributable transaction costs.
Subsequent to initial recognition,
interest-bearing borrowings are
stated at amortised cost using the
effective interest method, less any
impairment losses. Any change in
their value through impairment or
reversal of impairment is recognised
in profit or loss. Discounting is omitted
where the effect is immaterial.
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.
2.7 Property, plant and equipment
Property, plant and equipment are
stated at cost less accumulated
depreciation and accumulated
impairment losses.
Where parts of an item of property,
plant and equipment have different
useful lives, they are accounted for
as separate items of property, plant
and equipment.
Depreciation is charged to the
income statement over the
estimated useful lives of each part
of an item of property, plant and
equipment. In the case of Right-of-
use assets, depreciation is charged
over the life of the asset or its lease
term, whichever is lower. Land is not
depreciated. The estimated useful
lives and depreciation methods are
as follows:
Depreciation methods, useful lives
and residual values are reviewed at
each reporting date.
2.8 Business combinations
Subject to the transitional relief in
IFRS 1 ‘First time adoption of IFRSs’, all
business combinations are accounted
for by applying the acquisition
method. Business combinations are
accounted for using the acquisition
method as at the acquisition date,
which is the date on which control is
transferred to the Group.
Acquisitions after 1 January 2011
For acquisitions on or after 1
January 2011, the Group measures
goodwill at the acquisition date as:
1. the fair value of the
consideration transferred; plus
2. the recognised amount of any
non-controlling interests in the
acquiree; plus
3. the fair value of the existing equity
interest in the acquiree; less
4. the fair value of the identifiable
assets acquired and liabilities
assumed.
When the excess is negative, a
bargain purchase gain is recognised
immediately in profit or loss. Costs
related to the acquisition, other than
those associated with the issue
of debt or equity securities, are
expensed as incurred and included in
the separately disclosed ‘acquisition
costs’ as part of administration
expenses. Any contingent
consideration payable is recognised
at fair value at the acquisition date.
Implied interest cost of deferred
consideration is accounted as finance
cost. Subsequent changes to the fair
value of the contingent consideration
are recognised in profit or loss.
2.9 Intangible assets
Goodwill
Goodwill is stated at cost less any
accumulated impairment losses.
Goodwill is allocated to operating
segments and is not amortised but
is tested annually for impairment,
or earlier if there is an indication of
impairment
Acquired intangibles
Intangible assets acquired as part
of business combinations are
capitalised at fair value at the date
of acquisition. Following the initial
recognition, the carrying amount
of an intangible is its cost less
accumulated amortisation and any
accumulated impairment losses.
Amortisation is charged on the basis
of the estimated useful life on a
straight-line basis and the expense
is taken to the income statement
and included in the separately
Property
Up to 50 years - straight line
Plant, machinery
and equipment
3 to 20 years - straight line
Motor vehicles
4 to 5 years - straight line
Right-of-use
property
2 to 12 years - straight line
Right-of-use
motor vehicles
2 to 5 years - straight line
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Annual Report and Accounts for the year end December 2024
disclosed ‘amortisation of acquired
intangibles’ as part of administration
expenses (note 11).
The Group has recognised customer
relationships and brand identity
as separately identifiable acquired
intangible assets. The useful economic
life attributed to each intangible
asset is determined at the time of
the acquisition and ranges from two
to ten years. Impairment reviews are
undertaken whenever the Directors
consider that there has been a
potential indication of impairment.
Website development costs
Website development costs that
generate economic benefits beyond
one year are capitalised as intangible
assets and amortised on a straight-
line basis over a period of up to six
years, or by exception over a longer
period where it is expected that
economic benefits are attributable
over a longer period. The remaining
useful life of assets is reviewed on an
annual basis, or where a change in
the business or other circumstances
would trigger a revision. Assets under
development are not amortised
but instead tested for impairment
annually. The amortisation expense
on intangible assets is recognised
in the income statement within
administration costs. Software as a
service (“SAAS”) contract costs are
expensed to the Income Statement
over the life of the contract. For
SAAS and cloud based technology,
integration costs are capitalised only
when they represent enhancements
to Group’s existing assets. Capitalised
development expenditure is stated at
cost less accumulated amortisation
and less accumulated impairment
losses. Capitalised costs include
employee costs incurred on project
management, system architecture
development and testing.
2.10 Inventories
Inventories are stated at the lower of
cost and net realisable value, after
making allowance for obsolete and
slow-moving items. Cost includes
expenditure incurred in acquiring
the inventories and other costs
in bringing them to their existing
location and condition, including,
where appropriate, labour expended
in processing of assembled goods.
2.11 Impairment
Financial assets
(including receivables)
A financial asset not carried at
fair value through profit or loss is
assessed at each reporting date to
determine expected future losses.
A financial asset is impaired if the
assessment reveals expected future
losses based on detailed review of
future expected cash flows from the
financial asset.
An impairment loss in respect
of a financial asset measured at
amortised cost is calculated as the
difference between its carrying
amount and the present value of
the estimated future cash flows
discounted at the asset’s original
effective interest rate. Interest on
the impaired asset continues to be
recognised through the unwinding
of the discount. When a subsequent
event causes the amount of
impairment loss to decrease, the
decrease in impairment loss is
reversed through profit or loss.
Non-financial assets
The carrying amounts of the
Group’s non-financial assets are
reviewed at each reporting date
to determine whether there is any
indication of impairment. If any such
indication exists, then the asset’s
recoverable amount is estimated.
For goodwill, and intangible assets
that have indefinite useful lives or
that are not yet available for use,
the recoverable amount is estimated
each year at the same time.
The recoverable amount of an
asset or operating segment is
the greater of its value in use and
its fair value less costs to sell.
In assessing value in use, the
estimated future cash flows are
discounted to their present value
using a pre-tax discount rate that
reflects current market assessments
of the time value of money and
the risks specific to the asset. For
the purpose of impairment testing,
assets that cannot be tested
individually are grouped together by
cash generating units. The goodwill
acquired in a business combination,
for the purpose of impairment
testing, is also allocated to the
relevant cash generating unit.
Goodwill acquired in a business
combination is allocated to cash
generating units that are expected
to benefit from the synergies of
the combination and represent the
lowest level within the Group at
which management monitor the
related goodwill.
An impairment loss is recognised if
the carrying amount of an asset or
its cash generating units exceeds
its estimated recoverable amount.
Impairment losses are recognised in
the income statement. Impairment
losses recognised in respect of cash
generating units are allocated first
to reduce the carrying amount of
any goodwill allocated to the cash
generating units, and then to reduce
the carrying amounts of the other
assets in the cash generating unit
on a pro rata basis.
An impairment loss in respect of
goodwill is not reversed. In respect
of other assets, impairment losses
recognised in prior periods are
assessed at each reporting date
for any indications that the loss has
decreased or no longer exists. An
impairment loss is reversed if there
has been a change in the estimates
used to determine the recoverable
amount. An impairment loss is
reversed only to the extent that
the asset’s carrying amount does
not exceed the carrying amount that
would have been determined, net of
depreciation or amortisation, if no
impairment loss had been recognised.
2.12 Employee benefits
Defined contribution plans
A defined contribution plan is a post-
employment benefit plan under which
the Group pays fixed contributions
into a separate entity and will have
no legal or constructive obligation to
pay further amounts. Obligations for
contributions to defined contribution
pension plans are recognised as an
expense in the income statement in
the periods during which services are
rendered by employees.
2.13 Share-based payments
The Group issues equity-settled
share-based payments to certain
employees. Equity-settled share-
based payments are measured
75
Financial report
at fair value at the date of grant.
The fair value determined at the
grant date of the equity-settled
share-based payments is expensed
on a straight-line basis over the
vesting period, based on the
Group’s estimate of shares that
will eventually vest. Fair value is
measured by use of the Black-
Scholes model or appropriate
variations thereof. An expert is
used to assist management with
the valuation.
2.14 Provisions
A provision is recognised in the
statement of financial position when
the Group has a present legal or
constructive obligation as a result
of a past event that can be reliably
measured and it is probable that an
outflow of economic benefits will
be required to settle the obligation.
Provisions are determined by
discounting the expected future
cash flows at a pre-tax rate that
reflects risks specific to the liability.
2.15 Revenue
Revenue from sale of goods
Revenue from sale of goods is the
total amount receivable by the
Group for goods supplied, excluding
VAT and discounts. Revenue from
the sale of goods is recognised in
the income statement at a point in
time at the point of despatch.
Revenue for sale of goods includes
income from delivery charged to
customers, excluding VAT. Delivery
income is recognised at the same
time as the corresponding revenue
for sale of goods and is a single
combined performance obligation.
Rebates payable to customers are
recognised in line with the relevant
contractual terms. Rebates payable
to customers are contingent on the
occurrence or non-occurrence of
a future event e.g. the customer
meeting an agreed certain sales
value. Rebates are recorded using the
most likely method (the single most
likely amount in a range of possible
consideration amounts). Accruals are
made for each individual rebate based
on the specific terms and conditions
of the customer agreement.
Management makes estimates on
an ongoing basis, primarily based on
current customer spending, historic
data and its accumulated experience,
in order to assess customer revenues
and to calculate total rebates earned.
Rebates are charges directly to the
Consolidated Income Statement
over the period to which they relate
and are recognised as a deduction
from revenue.
Revenue from on-site services
Service revenues comprise installation
and maintenance work at client
sites. Revenue from on-site work
that is standard and on-going (as
opposed to bespoke) is recognised
when the performance obligations
under the work order are completed
and acknowledged by the customer,
in accordance with the terms
and conditions of the work order.
Very occasionally, where routine
maintenance work is agreed as part of
a contract covering a year or number
of years, the performance obligation
is considered to be discharged evenly
through the term of the contract and
revenue is recognised over the life of
the contract. Warranties offered to
customers are usually on the back
of warranties offered by suppliers
of spare parts and involve negligible
costs to the business.
Revenue from bespoke longer-
term services is accounted for in
accordance with the policy on Revenue
from contracts described below.
Revenue from contracts
Revenue from contracts involve
providing an end to end solution,
involving some or all of project
management, design, manufacture,
customisation, installation and
commissioning that can last several
months or years. To determine
whether to recognise revenue, the
Group follows a 5-step process:
1. Identifying the contract
with a customer
2. Identifying the performance
obligations
3. Determining the transaction price
4. Allocating the transaction price
to the performance obligations,
and then
5. Recognising revenue when/as
performance obligation(s)
are satisfied
The contract is then assessed
to determine whether it contains
a single combined performance
obligation or multiple performance
obligations. If applicable the total
transaction price is allocated
amongst the various performance
obligations based on their relative
stand-alone selling prices. Revenue
is recognised either at a point in time
or over time, when (or as) the Group
satisfies performance obligations by
transferring the promised goods or
services to its customers.
Where the Group also provides a
significant service of integrating
components and services under
the contract, the sum total of the
deliverables (solution) under the
contract is treated as a single
performance obligation. In this
case, the Group has assessed that
control of the solution transfers
to the customer over time. This is
because each solution is unique to
the customer (has no alternative use)
and the Group is entitled to a right
to payment for the work certified as
completed in the event the customer
sought to terminate the contract.
Revenue for these performance
obligations is recognised as the
customisation or integration work is
performed, using the input method
to estimate progress towards
completion. On contracts where it
has been assessed that we do not
meet the criteria to transfer control
over time contract revenue is instead
recognised at a point in time upon
completion and handover of a project.
Billings on bespoke solutions contracts
are based on attaining specified
contract milestones. Contract assets
will arise in situations where revenue
is recognised in advance of the next
progress billing. When payments are
received that exceed the revenue
recognised to date on a particular
contract, any excess reported in the
financial position as deferred income
under contract liabilities.
2.16 Cost of sales
Cost of sales includes all costs
incurred up to the point of despatch
including operating expenses of the
warehouse.
2.17 Distribution expenses
Distributions costs are costs directly
76
Annual Report and Accounts for the year end December 2024
relating to despatch of goods and
indirect costs including advertising
and other sales related expenses.
2.18 Operating Divisions
During 2023, the Group began
monitoring performance based on
geographical segments.
The Group monitors and reports
business performance based on
these three segments:
Great Britain:
Supply of both hydraulic and
pneumatic consumables, along with
the delivery of specialist engineering
solutions, services and systems.
We operate through a network of
distributors and resellers as well as
working directly with a broad range
of original equipment manufacturers
across all industry sectors.
Ireland:
Supply of specialist technical
hydraulic components and systems
predominantly into original
equipment manufacturers and
end-user channels to all industry
sectors and supported by supply
agreements direct to a broad range
of manufacturer brands.
Benelux:
Supply of bespoke hydraulic and
pneumatic component and systems
to manufacturers of specialised
industrial and mobile hydraulic original
equipment manufacturers and a wide
range of industrial end users.
Executive Management are
considered to be the chief operating
decision maker (CODM). The CODM
manages the business using an
underlying profit figure. Only finance
income and costs secured on the
assets of the operating segment
are included in the segment results.
Finance income and costs relating to
loans held by the Company are not
included in the segment result that
is assessed by the CODM. Transfer
prices between operating segments
are on an arm’s length basis.
2.19 Financing income
and expenses
Financing expenses comprise
interest payable, implied interest on
deferred consideration and finance
costs implied in leases recognised
in profit or loss using the effective
interest method. Financing income
comprises interest receivable on
funds invested. Interest income and
interest payable is recognised in
profit or loss as it accrues, using the
effective interest method.
2.20 Taxation
Tax on the profit or loss for the year
comprises current and deferred
tax. Tax is recognised in the income
statement except to the extent
that it relates to items recognised
in other comprehensive income, in
which case it is recognised in other
comprehensive income.
Current tax is the expected tax
payable or receivable on the taxable
income or loss for the year, using
tax rates enacted or substantively
enacted at the reporting date, and
any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on
temporary differences between
the carrying amounts of assets
and liabilities for financial reporting
purposes and the amounts
used for taxation purposes. The
following temporary differences
are not provided for: the initial
recognition of goodwill; the initial
recognition of assets or liabilities
that affect neither accounting
nor taxable profit other than in
a business combination; and
differences relating to investments
in subsidiaries to the extent that
they will probably not reverse
in the foreseeable future. The
amount of deferred tax provided
is based on the expected manner
of realisation or settlement of the
carrying amount of assets and
liabilities, using tax rates enacted
or substantively enacted at the
Statement of Financial Position date.
A deferred tax asset is recognised
only to the extent that it is probable
that future taxable profits will
be available against which the
temporary difference can be utilised.
2.21 Equity, reserves
and dividend payments
Equity comprises the following:
• ‘Share capital’ represents the
nominal value of equity shares
• ‘Share premium’ represents the
excess over nominal value of
consideration received for equity
share net of expenses of the share
issue, less any costs associated
with the issuing of shares
• ‘Other reserves’ relate to the issue
of share options for consideration
in respect of acquisition of
subsidiaries
• ‘Shares owned by the EBT’
represents shares in the Group
purchased for the Employee
Benefit Trust
• ‘Merger reserve’ represents the
difference between the Parent’s
capital and the acquired Group’s
capital retained losses and other
equity balances before and after
the share for share exchange
which created the Group
• ‘Merger relief reserve’ represents
merger relief arising on the
acquisition of subsidiaries
for which some or all of the
consideration was settled in shares
• ‘Currency translation reserve’
comprises all foreign exchange
differences arising since 1 January
2011, arising from the translation of
foreign operations
• ‘Retained losses’ represent
retained losses of the Group, and
• ‘Non-controlling interest’ relates to
profits attributable to non-material
non-controlling interests held in
subsidiaries.
All transactions with owners of the
Parent are recorded separately
within equity.
Dividend distributions payable to
equity Shareholders are included in
other liabilities when the dividends
have been approved in general
meeting prior to the reporting date.
2.22 Foreign currency translation
Functional and presentation
currency
The consolidated financial
statements are presented in sterling,
which is also the functional currency
of the Parent Company.
Foreign currency transactions
and balances
Transactions in foreign currencies
are translated to the respective
77
Financial report
functional currencies of Group
entities at the foreign exchange rate
ruling at the date of the transaction.
Monetary assets and liabilities
denominated in foreign currencies
at the reporting date are
re-translated to the functional
currency at the foreign exchange
rate ruling at that date. Foreign
exchange differences arising on
translation are recognised in the
income statement. Non-monetary
assets and liabilities that are
measured in terms of historical cost
in a foreign currency are translated
using the exchange rate at the date
of the transaction. Non-monetary
assets and liabilities denominated
in foreign currencies that are stated
at fair value are re-translated to
the functional currency at foreign
exchange rates ruling at the dates
the fair value was determined.
Foreign operations
In the Group’s financial statements,
all assets, liabilities and transactions
of Group entities with a functional
currency other than sterling are
translated into sterling upon
consolidation. The functional
currency of the entities in the Group
has remained unchanged during the
reporting period.
The assets and liabilities of foreign
operations are translated to the
Group’s presentational currency,
sterling, at foreign exchange rates
ruling at the reporting date. The
revenues and expenses of foreign
operations are translated at an
average rate for the year where this
rate approximates to the foreign
exchange rates ruling at the dates
of the transactions.
Exchange differences arising
from this translation of foreign
operations are reported as an item
of other comprehensive income
and accumulated in the currency
translation reserve. The Group
has taken advantage of the relief
available in IFRS 1 to deem the
cumulative translation differences
for all foreign operations to be zero
at the date of transition to Adopted
IFRSs (1 January 2011).
On disposal of a foreign operation,
the related cumulative translation
differences recognised in equity are
reclassified to profit or loss and are
recognised as part of the gain or
loss on disposal.
2.23 Separately disclosed items
Separately disclosed items are
those significant items which in
management’s judgement should
be highlighted by virtue of their
size or incidence to enable a full
understanding of the Group’s
financial performance.
2.24 Investment in own shares
Own shares held by the Group’s
Employee Benefit Trust (EBT) have
been classified as deductions from
Shareholders’ funds. The costs of
purchasing own shares held by
the EBT are shown as a deduction
within Shareholders’ equity. The
gain from the sale of own shares is
recognised in Shareholders’ equity.
Neither the purchase nor sale of
own shares leads to a gain or loss
being recognised in the income
statement.
2.25 Significant judgements,
key assumptions and estimates
In the process of applying the Group’s
accounting policies, which are
described above, management have
made judgements and estimations
about the future that have the most
significant effect on the amounts
recognised in the financial statements.
The estimates and underlying
assumptions are reviewed on an
ongoing basis. Revisions to accounting
estimates are recognised in the period
in which the estimate is revised if the
revision affects only that period or in
the period of the revision and future
periods if the revision affects both
current and future periods.
Significant management judgements
There are no significant judgements
affecting the financial position this
year (2023: nil).
Estimation uncertainty
Information about estimations and
assumptions that may have the most
significant effect on recognition and
measurement of assets, liabilities,
income and expenses is provided
below. Actual results may be
substantially different.
Impairment of goodwill
The carrying value of goodwill
must be assessed for impairment
annually. This requires an estimation
of the value in use of the cash
generating units (CGUs) to which
goodwill is allocated. Value in use
is dependent on estimations of
future cash flows from the CGU
and the use of an appropriate
weighted average cost of capital to
discount those cash flows to their
present value. The carrying value of
goodwill as at 31 December 2024 is
£14,996,000 (2023: £40,066,000).
Refer to note 10 for further detail.
Estimation uncertainty relates to
assumptions about future operating
results and the determination of a
suitable discount rate (see note 10).
Acquired intangibles
In assessing impairment,
management estimates the
recoverable amount of each asset
or cash generating unit based on
expected future cash flows and uses
an appropriate weighted average
cost of capital to discount them.
Estimation uncertainty relates to
assumptions about future operating
results and the determination of a
suitable discount rate (see note 10).
Provision for impairment of
inventories
The carrying value of inventories
as at 31 December 2024 was
£29,263,000 (2023: £32,009,000)
and included a provision against
the inventories of £1,863,000
(2023: £1,891,000). The provision
for impairment of inventories is
based on a sensitivity analysis,
sales trends for all inventory
and management’s estimation of
recoverability. As always, there is
a risk that the provision will not
match the inventories that ultimately
prove to be impaired. The provision
represents 5.9% of gross value;
it should be noted that a 0.5%
movement in either direction has an
approximate £156,000 impact.
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Annual Report and Accounts for the year end December 2024
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.
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.
79
Financial report
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 profit/(loss)
(7,760)
1,487
2,953
-
(7,047)
(10,367)
(*) Underlying operating result is continuing operations’ operating profit before separately disclosed items detailed below.
Share-based payment costs relate to charges made in accordance with IFRS 2 ‘Share-based payment’ following the issue of share options to employees.
Restructuring costs relate to restructuring activities of an operational nature following acquisition of business units and other restructuring activities in established businesses.
In 2024 restructuring costs included £377k relating to the exit of members of the previous leadership team, £441k related to the acquisition of Thorite and £1,705k related to
the organisation redesign and One Flowtech project.
2024
£000
2023
£000
Separately disclosed items
Separately disclosed items within administration expenses:
- Acquisition costs
41
-
- Amortisation of acquired intangibles (note 11)
820
906
- Accelerated depreciation of old website
241
-
- Impairment of Fixed assets)
246
-
- Impairment of goodwill (note 10)
25,070
13,026
- Impairment of right of use asset (note 21)
81
456
- Negative goodwill (note 24)
(2,205)
-
- Share-based payment costs (note 22)
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
80
Annual Report and Accounts for the year end December 2024
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
81
Financial report
4. Operating loss/profit
The following items have been included in arriving at the operating loss/profit for continuing operations:
Services provided by the Group’s Auditor
No other services were provided to the Company and its subsidiaries by the Group’s auditor. Services are provided
by other professional advisers as deemed appropriate by the Board.
2024
£000
2023
£000
Depreciation of property, plant and equipment under right-of-use assets (note 21)
1,532
1,810
Depreciation and impairment of tangible assets (note 13)
1,788
1,363
Amortisation of intangible assets – website (note 11)
241
210
Amortisation of intangible assets – customer relationships and brands (note 11)
820
906
Impairment of intangible asset
284
-
Impairment of goodwill (note 10)
25,070
13,026
Impairment of right of use asset (note 21)
81
456
Impairment loss/(gain) on trade receivables and prepayments
10
10
Loss on foreign currency transactions
(151)
(9)
Repairs and maintenance expenditure on plant and equipment
16
292
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
82
Annual Report and Accounts for the year end December 2024
5. Directors & employees
The average number of persons employed by the Group (including Directors) during each year, analysed by category,
was as follows:
Number
2024
Number
2024
Assembly and distribution
276
270
Administration
320
311
Total*
596
581
Payroll costs of these people were as follows:
2024
£000
2023
£000
Wages and salaries (*)
22,628
20,626
Social security costs
2,483
2,241
Contributions to defined contribution pension plans
714
730
Share based payments (note 22)
729
462
Total
26,660
24,059
Key management compensation
The remuneration of the Directors and the Chair, who are all statutory Directors and are the key management of the
Group, is set out below in aggregate for each of the key categories specified in IAS 24 ‘Related Party Disclosures’.
* The acquisition of Thorite contributed an average of 30 additional employees to 2024 numbers.
The amounts set out above include remuneration in respect of the highest paid Director as follows:
2024
£000
2023
£000
Remuneration
813
834
Compensation for loss of office
-
169
Bonus
-
61
Social security costs
105
130
Benefits in kind
5
9
Total
923
1,203
2024
£000
2023
£000
Highest paid Director’s
Remuneration
363
134
Compensation for loss of office
-
169
Bonus
-
-
Social security costs
49
32
Benefits in kind
1
7
Total highest paid Director’s remuneration
413
342
83
Financial report
6. Financial expenses
7. Taxation
Recognised in the income statement
Finance expenses for the year consist of the following:
2024
£000
2023
£000
Finance expense arising from:
Interest on revolving credit facility
1,417
1,419
Overdraft interest
-
-
Amortisation of loan arrangement fee
44
80
Other financing costs
153
17
Total bank interest
1,614
1,516
Interest on lease liabilities
222
221
Total lease interest
222
221
Total finance expense
1,836
1,737
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
84
Annual Report and Accounts for the year end December 2024
9. 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.
2024
£000
2023
£000
Final dividend of 2.2p (2023: 2.1p) per share
1,383
1,289
Total dividends
1,383
1,289
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
10. 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
The amount reflected in the table is the final dividend of 2.2p in respect of FY23’s performance which was paid during the year on 19 July 2024.
8. Dividends
85
Financial report
Background
Goodwill impairment is monitored
for groups of CGUs. The CGU
groupings are split across the three
geographical segments.
The carrying amounts of goodwill
allocated now stands as at 31
December 2024 are:
Impairment tests
The carrying amount of goodwill
in each geographical segment
was determined by calculating
the sum of the carrying amounts
of all intangible assets (including
goodwill) and tangible assets
attributable to that unit. These were
then compared with the value in use
calculations for each geographical
segment based on discounted cash
flows of future period forecasts.
Management prepared forecasts for
a five-year period and all forecasts
have been approved by the Board.
Cash flows beyond the period
forecast by management for each
CGU were extrapolated at an
expected long-term growth rate
of 2%. This growth rate does not
exceed the long-term average
growth rate for the market in which
the Group operates.
Goodwill impairment charges
in 2024
In total an impairment charge of
£25,620,000 has been taken in 2024,
of which £25,070,000 was taken
against Goodwill, £246,000 against
fixed assets, £284,000 against
intangible assets and £20,000 against
right of use assets. The split of
impairment charge by geographical
segment is shown below:
• 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 £13,127,000. 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 CGU’s being
fully impaired at the assessment date
no further impairment would arise on
sensitivity analysis.
Geographical segment
£000
unaudited
Great Britain
13,127
Island of Ireland
1,869
Benelux
-
Total
14,996
86
Annual Report and Accounts for the year end December 2024
11. Other intangible assets
12. Subsidiary undertakings
Acquired Customer
relationships
Acquired Brands
Website
Total
2024
£000
2023
£000
2024
£000
2023
£000
2024
£000
2023
£000
2024
£000
2023
£000
Balance at 1 January
9,371
9,371
1,173
1,173
1,094
973
11,638
11,517
Additions
800
-
257
-
1,764
121
2,821
121
Balance at 31 December
10,171
9,371
1,430
1,173
2,858
1,094
14,459
11,638
Balance at 1 January
7,632
6,726
1,173
1,131
304
94
9,109
7,993
Amortisation
778
906
43
42
469
210
1,290
1,116
Impairment
284
-
-
-
-
-
284
-
Balance at 31 December
8,693
7,632
1,216
1,173
773
304
10,683
9,109
Carrying amount at 31 December
1,477
1,739
214
-
2,085
790
3,776
2,529
Country of incorporation
Principal activity
Ownership
Fluidpower MIP Limited
UK
Holding company
100%
Fluidpower Group UK Limited
UK
Distributors of engineering components
100%
Fluidpower Group Services UK Limited
UK
Assembly and distribution of engineering components
100%
Flowtech Fluidpower Ireland Limited
ROI
Assembly and distribution of engineering components
100%
Flowtechnology Benelux BV
Netherlands
Distributors of engineering components
100%
The Hydraulic Group BV
Netherlands
Holding company
100%
Hydroflex-Hydraulics BV
Netherlands
Assembly and distribution of engineering components
100%
Hydroflex-Hydraulics Rotterdam BV
Netherlands
Assembly and distribution of engineering components
100%
Hydroflex-Hydraulics Belgium NV
Belgium
Assembly and distribution of engineering components
100%
Fluidpower Shared Services Limited
UK
Group Shared Service Centre
100%
Beaumanor Engineering Limited
UK
Dormant
100%
Indequip Limited
UK
Dormant
100%
KR Couplings Limited
UK
Dormant
100%
Betabite Hydraulics Limited
UK
Dormant
100%
Hydraulics (Ireland) Limited
UK
Dormant
100%
Haitima Flow Control UK Limited
UK
Dormant
100%
Hydravalve UK Limited
UK
Dormant
100%
Hydraulic Equipment Supermarkets Limited
UK
Dormant
100%
Branch Hydraulic Systems Limited
UK
Dormant
100%
HES Tractec Limited
UK
Dormant
100%
For all the subsidiaries above, the class of shares held are ordinary shares and all subsidiaries,
except Fluidpower MIP Limited, are indirect subsidiaries of Flowtech Fluidpower plc.
87
Financial report
13. Property, plant & equipment
Land and
property
£000
Plant, machinery
and equipment
£000
Motor vehicles
£000
Total
£000
Cost
Balance at 1 January 2023
1,345
15,828
760
17,933
Additions
-
2,030
62
2,092
Disposals
-
(248)
(3)
(251)
Effect of movements in foreign exchange
-
(28)
(5)
(33)
Balance at 31 December 2023 and 1 January 2024
1,345
17,582
814
19,741
Additions
-
1,506
40
1,546
Disposals
-
-
(65)
(65)
Effect of movements in foreign exchange
-
(64)
(12)
(76)
Balance at 31 December 2024
1,345
19,024
777
21,146
Depreciation and impairment
Balance at 1 January 2023
289
9,924
486
10,699
Depreciation charge for the year
48
1,190
125
1,363
Disposals
-
(122)
(1)
(123)
Other movement
-
(43)
-
(43)
Effect of movements in foreign exchange
-
20
3
23
Balance at 31 December 2023
337
10,969
613
11,919
Depreciation charge for the year
55
1,409
78
1,542
Disposals
-
-
(47)
(47)
Impairment
-
246
-
246
Effect of movements in foreign exchange
-
(51)
(9)
(52)
Balance at 31 December 2024
392
12,573
635
13,600
Net book value
At 31 December 2024
953
6,451
142
7,546
At 1 January 2024
1,008
6,610
205
7,822
At 1 January 2023
1,056
5,904
274
7,234
Included in land and property is land at a cost of £145,000 which is not depreciated (2023: £145,000).
88
Annual Report and Accounts for the year end December 2024
14. Deferred tax assets & liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
2024
£000
2023
£000
2024
£000
2023
£000
Intangible assets
-
-
(324)
(434)
Property, plant and equipment
-
-
(1,045)
(1,114)
Provisions
48
14
-
-
Losses and other deductions
530
-
-
-
Tax assets/(liabilities)
578
14
(1,369)
(1,548)
Net deferred tax liability
-
-
(791)
(1,534)
Movement in deferred tax during the year ended 31 December 2024
Movement in deferred tax during the year ended 31 December 2023
1 January 2024
£000
Recognised in profit or loss
£000
31 December 2024
£000
Intangible assets
(434)
110
(324)
Property, plant and equipment
(1,114)
69
(1,045)
Provisions
14
34
48
Losses and other deductibles
-
530
530
(1,534)
743
(791)
1 January 2023
£000
Recognised in profit or loss
£000
31 December 2023
£000
Intangible assets
(450)
16
(434)
Property, plant and equipment
(864)
(250)
(1,114)
Provisions
17
(3)
14
Employee share-based payments
16
(16)
-
Losses and other deductibles
-
-
-
(1,281)
(253)
(1,534)
89
Financial report
15. Inventories
16. Trade & other receivables
2024
£000
2023
£000
Finished goods and goods for resale
29,263
32,009
Charges for finished goods recognised as cost of sales in the year amounted to £58,813,000 (2023: £62,023,000).
The write-down of inventories to net realisable value amounted to £(204,000) (2023: £768,000). The write-downs
and reversals are included in cost of sales. The provision made against inventories at the year-end was £1,863,000
(2023: £1,891,000).
Estimates are made of the net realisable value of inventory at the year end. In some circumstances, inventory is
subsequently sold in excess of the net realisable value determined, which results in a reversal of the write-down.
The ageing of trade receivables at the Statement of Financial Position date was:
The movement in the allowance of impairment in respect of trade receivables during each year was as follows:
2024
£000
2023
£000
Trade receivables
20,610
22,058
Other receivables
2,130
1,667
Trade and other receivables
22,740
23,725
Gross 2024
£000
Impairment 2024
£000
Gross 2023
£000
Impairment 2023
£000
Not past due
13,739
66
14,228
53
Past due 0-30 days
4,870
23
5,904
22
Past due 31-60 days
875
55
572
30
Past due 61-90 days
303
20
444
23
More than 90 days past due
1,052
64
1,079
41
20,839
229
22,227
169
2024
£000
2023
£000
Balance at 1 January 2024
169
195
Net change due to acquisitions and disposals of subsidiaries
124
Provision utilised
(50)
(18)
(Decrease)/Increase in provision
(14)
(8)
Balance at 31 December 2024
229
169
The overall expected credit loss rate is 1.1% (2022: 0.8%).
90
Annual Report and Accounts for the year end December 2024
17. Cash & cash equivalents
18. Interest-bearing loans & borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings,
which are measured at amortised cost. For more information about the Group’s exposure to interest rate and foreign
currency risk, see note 27.
2024
£000
2023
£000
Cash and cash equivalents:
Sterling
297
3,950
Euro
1,532
1,220
Dollar
10
14
Total cash and cash equivalents
1,839
5,184
2024
£000
2023
£000
Non-current liabilities
Revolving credit facility ($)
16,913
19,915
Lease liabilities
3,743
3,822
Total non-current liabilities
20,656
23,737
Current liabilities
Revolving credit facility
-
-
Lease liabilities
1,694
1,695
Total current liabilities
1,694
1,695
Total
22,350
25,432
($) RCF loan arrangement fee of £120,000 was paid in November 2020 and an additional £133,645 were charged in February 2023. The loan arrangement fees are amortised
over the life of the loans (36 months). Accordingly, £45,000 amortisation charge is charged to the income statement during 2024 (2023: £83,000). The unamortised value of
the loan fee as at 31 December 2024 of £87,000 is netted off against the RCF Facility of £20,000,000 which has a balance at the year-end of £17,000,000.
Terms and debt repayment schedule
Currency
Nominal interest rate
Year of maturity
Carrying value
2024
£000
Carrying value
2023
£000
Secured revolving credit facility
GBP
SONIA+ 2.40%
2027
17,000
20,000
Lease liabilities
GBP
Various
2021 to 2031
4,960
4,890
Lease liabilities
EUR
Various
2021 to 2027
477
626
22,437
25,516
This is the outstanding amount of the £20m facility which carries a nominal interest rate of SONIA + 2.40% and is
subject to a non-utilisation fee of 0.84% The £20m facility is secured by legal charges over certain of the Group’s
assets which include trade receivables and stock. The Group also has a £5,000,000 overdraft facility which was
reviewed in February 2023 and on-going support was approved. Whilst technically repayable on demand there is no
expectation that the bank would ever withdraw this facility.
91
19. Trade & other payables
20. Provisions
Provisions have been analysed between current and non-current as follows:
Provisions comprise dilapidation provisions in respect of leasehold properties held by the Group and represents
management’s best estimate of the amount which is expected to be settled in respect of dilapidation costs for the
relevant sites.
Financial report
2024
£000
2023
£000
Current liabilities
Trade payables
13,975
13,594
Accrued expenses and deferred income
4,492
5,802
Social security and other taxes
2,399
2,162
20,866
21,558
Accrued expenses and deferred income is broken down as follows:
2024
£000
2023
£000
Accrued expenses
3,841
3,577
Deferred income
651
2,225
Contract liabilities – advances received for contract work
-
-
Contract liabilities – deferred service revenue
-
-
4,492
5,802
2024
£000
2023
£000
Opening balance
330
317
Amount utilised during year
(19)
(192)
Amount provided/(released) in the year
(134)
207
Closing balance
179
330
2024
£000
2023
£000
Current
-
-
Non-current
179
330
Total
179
330
92
Annual Report and Accounts for the year end December 2024
21. Right-of-use assets & lease liabilities
Right-of-use assets
The statement of profit or loss shows the following amounts relating to right-of-use assets and liabilities:
Analysis by length of liability
Land and
property
£000
Plant,
machinery and
equipment
£000
Motor vehicles
£000
Total
£000
Cost
Balance at 1 January 2024
8,792
399
2,318
11,509
Additions
507
-
1,121
1,628
Disposals
-
-
(698)
(698)
Effect of movement in foreign exchange
(83)
-
(17)
(100)
Other movements
(904)
-
(61)
(965)
Balance at 31 December 2024
8,312
399
2,663
11,374
Depreciation and amortisation
Balance at 1 January 2024
4,883
190
1,607
6,680
Depreciation charge for the year
948
57
528
1,533
Impairment
61
-
20
81
Disposals
-
-
(685)
(685)
Effect of movements in foreign exchange
(58)
-
(18)
(76)
Other Movements
(904)
-
(61)
(965)
Balance at 31 December 2024
4,930
247
1,391
6,568
Net book value
At 31 December 2024
3,382
152
1,272
4,806
At 31 December 2023
3,909
209
711
4,829
2024
£000
2023
£000
Depreciation charge of right-of-use assets
Land and property
948
1,177
Plant, machinery and equipment
57
57
Motor vehicles
528
576
Interest expenses (included in finance cost)
225
219
Exchange movements in income statement
-
-
Total expense in the income statement relating to right-of-use assets
1,758
2,029
As at 31 December 2024
As at 31 December 2023
Land and
property
£000
Plant, machinery
and equipment
£000
Motor
vehicles
£000
Total
£000
Land and
property
£000
Plant, machinery
and equipment
£000
Motor
vehicles
£000
Total
£000
Current
1,112
57
525
1,694
1,241
57
396
1,695
Non-current
2,860
134
749
3,743
3,340
216
320
3,822
Total
3,972
191
1,274
5,437
4,581
273
716
5,517
The table below describes the nature of the Group’s leasing activities by type of right-of-use assets recognised on
the Statement of Financial Position.
Land and
property
Plant, machinery
and equipment
Motor
vehicles
Number of right-of-use assets leased
21
5
88
Range of remaining term
1-8 years
4 years
1-4 years
Number of leases with extension options
6
-
-
Number of leases with termination options
6
-
-
93
22. Employee benefits
Financial report
22.1 Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans. The total expense relating to these plans was
£714,000 (2023: £730,000).
22.2 Share-based employee remuneration
As at 31 December 2024, the Group maintained three share-based payment schemes for employee remuneration:
the Management Incentive Plan; the Long-Term Incentive Plan, the Enterprise Management Incentive Plan, which
has two sub plans, Approved and Unapproved; and the Company Share Option Plan.
Long-term incentive plan (LTIP)
The LTIP has been established to incentivise management to deliver long-term value creation for Shareholders and
ensure alignment with Shareholder interests.
LTIPs are accounted for as an equity-settled share based payment transaction. The fair values of the options
granted were determined using the Monte Carlo model.
The following principal assumptions were used in the valuation:
Awards
LTIPs
(Share price)
Number of awards (*)
2,345,888
Grant date
02 June 2023
Vesting period ends
Up to 5 years
Share price at date of grant
£1.08
Volatility
49.6%
Option life
5 years
Dividend yield
0.01%
Risk-free investment rate
4.20%
Fair value at grant date
£0.26p to 0.65p
Exercisable from/to
2 June 2026 to 2 June 2028
Weighted average remaining contractual life
5 years
Awards Summary
Russell Cash
Mike England
Total
Share price
762,555
1,583,333
2,345,888
Total
762,555
1,583,333
2,345,888
94
Annual Report and Accounts for the year end December 2024
Enterprise Management Incentive Plan
The Enterprise Management Incentive Plan (EMI) is part of the remuneration package of certain employees, the
majority of options being issued on the date the Company was admitted to the London Stock Exchange. The sub
plans are named Approved and Unapproved by virtue of whether the plans qualify for HMRC approval. Options under
this scheme will vest if the participant remains employed for the agreed vesting period. Upon vesting each option
allows the holder to purchase one ordinary share. The number of shares subject to options and the exercise price are:
Date of grant
Exercise
price
Exercise period
2024
number
000
2023
number
000
Approved plan
21 May 2014
£1.00
4 April 2017 to 20 May 2024
-
225
8 August 2014
£1.26
4 April 2017 to 7 August 2024
-
12
-
237
Unapproved plan
21 May 2014
£1.00
4 April 2017 to 20 May 2024
-
22
11 August 2015
£1.32
4 April 2018 to 10 August 2025
60
60
1 July 2016
£1.00
4 April 2019 to 30 June 2026
45
45
1 January 2019
£1.13
5 May 2022 to 1 September 2025
9
9
25 October 2019
£0.50
5 May 2022 to 28 January 2026
150
150
8 January 2020
£0.50
31 March 2022 to 8 February 2030
-
50
28 May 2021
£1.00
15 March 2023 to 28 May 2031
150
150
14 Feb 2022
£1.00
01 Apr 2025 to 13 Feb 2032
70
90
04 April 2022
£1.24
04 Apr 2025 to 03 Apr 2032
60
60
04 April 2022
£1.00
04 Apr 2025 to 03 Apr 2032
75
75
619
711
619
948
Share options and weighted average exercise prices are as follows for the reporting periods presented:
Enterprise Management Incentive Plan
Approved scheme
Unapproved scheme
Number
of shares
000
Weighted
average
exercise price
per share
Number
of shares
000
Weighted
average
exercise price
per share
Total number
of shares
000
Outstanding at 1 January 2023
237
1.01
711
0.95
948
Granted
-
-
-
-
Lapsed
(12)
1.01
-
-
(12)
Forfeited
-
-
-
-
-
Exercised
(225)
1.01
(92)
0.93
(317)
Outstanding at 31 December 2024
-
-
619
0.95
619
Exercisable at 31 December 2024
-
-
-
-
-
95
Company Share Option Plan
The Company Share Option Plan (‘CSOP’) is part of the remuneration package of certain employees.
Options under this scheme will vest if the participant remains employed for the agreed vesting period.
Upon vesting each option allows the holder to purchase one ordinary share.
The number of shares subject to options and the exercise price are:
Share options and weighted average exercise prices are as follows for the reporting periods presented:
Financial report
Date of grantgrant
Exercise price
Exercise period
2024 number
000
2023 number
000
11 August 2015
£1.43
11 August 2018 to 10 August 2025
110
110
1 July 2016
£1.00
4 April 2019 to 30 June 2026
110
220
1 January 2019
£1.13
5 May 2022 to 02 Sep 2025
27
27
14 February 2022
£1.29
01 Apr 2025 to 31 Mar 2032
209
209
04 April 2022
£1.33
04 Apr 2025 to 03 Apr 2032
135
135
18 April 2024
1.00
18 April 2027 to 18 April 2034
2,235
-
2,826
701
Number of shares
Weighted average exercise price per share
Outstanding at 1 January 2023
701
1.23
Granted
2,235
1.00
Exercised
110
1.00
Lapsed
-
1.26
Outstanding at 31 December 2024
2,826
1.06
Exercisable at 31 December 2024
-
-
Exercisable at 31 December 2023
-
-
Awards
CSOPs
(Share price)
Number of awards (*)
2,200,000
Grant date
18 April 2024
Vesting period ends
3 years
Share price at date of grant
£0.98
Fair value at grant date
£0.22
Exercise price
£1
Volatility
33.70%
Option life
10 years
Exercisable from/to
18 April 2027 to 17 April 2034
Dividend yield
2.20%
Weighted average remaining contractual life
10 years
The consolidated income statement includes a charge of £729,000 (2023: £462,000) in respect of all of the share
options issued to staff.
96
Annual Report and Accounts for the year end December 2024
23. Equity
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 1 January 2024
61,492,676
30,746
At 31 December 2024
63,275,173
31,636
24. Acquisitions & Disposals
On 23 August 2024, the Group acquired the Trade and assets of Thomas Wright/Thorite Group Limited a UK based
supplier of pneumatics and hydraulics that were in administration. The total consideration was £764,000, which
included initial cash consideration of £350,000. The value of assets and liabilities recognised as on acquisition are
as follows:
Book Value
£000
Fair Value
£000
Trade Debtors
2,781
2,667
Inventory
2,762
2,295
Intangible assets
-
1,056
Deferred tax liability
-
(200)
Other payables- retention of title claims
-
(699)
Other Payables
(352)
(388)
Borrowings – Invoice discounting facility
(1,695)
(1,695)
Total
3,496
3,035
£000
Amount settled in cash
764
Less assets acquired
(3,035)
Legal fees
66
Negative Goodwill on acquisition
2,205
Consideration
The consideration consists of £350,000 initial consideration plus an additional £414,000 which was repaid to the
administrator against the value of the recovered trade debtors. All consideration recognised has been settled as at 31
December 2024.
Fair values
The fair values included in the table above are provisional and subject to management estimations at the reporting date.
Intangible assets
The intangible assets recognised within the Group relate to the Thorite Brand at £256,000 and the Customer list at
£800,000.
Thorite’s contribution to Group results
The Thorite branches generated sales of £4,799,000 and an underlying profit before tax of £111,000; after accounting
for £441,000 of restructuring cost, £87,000 amortisation of acquired intangibles and £524,000 of central recharges
the actual result is a loss before tax of £948,000 between the 23 August 2024 and 31 December 2024. The central
recharge cost is calculated as a proportion of total central costs, there has not been any incremental increase in central
costs as a result of the Thorite acquisition.
97
27. Related party transactions
Transactions between the Company, its Employee Benefit Trust and its subsidiaries, which are related parties,
have been eliminated on consolidation and are not disclosed in this note. Key management includes Executive
and Non-Executive Directors. The compensation paid or payable to key management is disclosed in the Directors’
Remuneration report. Dividends paid to Directors of the plc were as follows:
2024
£000
2023
£000
Bryce Brooks (stepped down as CEO on 12 April 2023)
-
6
Russell Cash
1
1
Roger McDowell
24
15
Nigel Richens (stepped down as NED on 25 April 2023)
-
1
Mike England
1
-
Stuart Watson
-
-
Jamie Brooke
5
2
Ailsa Webb
1
1
32
26
25. Net cash from operating activities
26. Contingent liabilities & commitments
The Group had capital expenditure of £735,000 contracted for but not provided at 31 December 2024 (2023: £Nil).
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 (note 13)
1,537
1,363
Depreciation on right-of-use assets (IFRS 16) (note 21)
1,526
1,810
Impairment of right-of-use assets (IFRS 16) (note 21)
82
456
Write off of right-of-use liability (IFRS 16)
-
(387)
Finance costs (note 6)
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 (note 10)
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
Financial report
98
Annual Report and Accounts for the year end December 2024
28. Financial instruments
28.1 Fair values of financial instruments
Fair values
The table below analyses financial instruments into a fair value hierarchy based on the valuation technique used to
determine fair value.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable input).
The Group is exposed to various risks in relation to financial instruments. Each of these is disclosed in the table below.
(*) In respect of the financial instruments such as short-term trade receivables and payables, interest bearing loans and borrowings, and cash and cash equivalents, we believe
the carrying value is a reasonable approximation of the fair value.
($) Trade payables and accruals includes £13,175k of trade payables and £3,841k of accrued expenses. Deferred income is excluded.
Carrying amount
2024 £000
Fair value
2024 £000
Carrying amount
2023 £000
Fair value
2023 £000
Loans and receivables
Cash and cash equivalents (note 17) (*)
1,839
1,839
5,184
5,184
Trade and other receivables (note 16) (*)
22,740
22,740
23,725
23,725
Total financial assets measured at amortised costs
24,579
24,579
28,909
28,909
Financial assets
24,579
24,579
28,909
28,909
Financial liabilities measured at amortised cost
Other interest-bearing loans and borrowings (note 18)
(22,437)
(22,437)
(25,516)
(25,516)
Trade payables and accruals (note 19) (*)($)
(17,816)
(17,816)
(17,171)
(17,171)
Total financial liabilities measured at amortised cost
(40,253)
(40,253)
(42,687)
(42,687)
Total financial liabilities
(40,253)
(40,253)
(42,687)
(42,687)
Total financial instruments
(15,494)
(15,494)
(13,778)
(13,778)
Financial instruments measured at fair value
Valuation technique
Forward exchange contracts
The Group hedges a part of the net expected exposure to euros and dollars in
a phased manner over 3 – 6 month period using fixed price forward contracts.
The hedging process aims to achieve an averaging of market rates over a period
of time, and significant gain/loss on open contracts is recognised in the income
statement at year end.
Bank loans and other interest-bearing borrowings
Interest-bearing borrowings are recognised at fair value less attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings
are stated at amortised cost using the effective interest method, less any
impairment losses.
99
28.3 Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to meet its financial commitments as they fall due or that it
fails to satisfy the requirements of its banking covenants. Management prepares robust annual and monthly cash
flow forecasts which are fully integrated with the core assumptions underpinning forecast profitability and Statement
of Financial Position movements; in addition, a rolling 13-week cash flow forecast is continually updated to provide
visibility as regards likely quarter end Net Debt positions.
As a result, the business has all the requisite monitoring capability to assess the impact which any adverse trading
conditions may present. The business is as focused on managing its working capital base as it is its profitability, a
combination which the Board views as key in continually managing this risk.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
There are no contractual maturities over five years, save for liabilities relating to right-of-use assets.
Year ended 31 December 2024
Carrying
amount
£000
Contractual
cash flows
£000
1 year
or less
£000
1 to 2
years
£000
2 to 5
years
£000
5 years
or more
£000
Non-derivative financial liabilities
Liabilities relating to right-of-use assets
5,437
5,534
1,573
1,573
1,304
669
Revolving credit facility
16,913
20,621
1,207
1,207
18,207
-
Trade payables and accrued expenses
17,816
17,816
17,816
-
-
-
40,166
43,971
20,596
2,780
19,511
669
Year ended 31 December 2023
Carrying
amount
£000
Contractual
cash flows
£000
1 year
or less
£000
1 to 2
years
£000
2 to 5
years
£000
5 years
or more
£000
Non-derivative financial liabilities
Liabilities relating to right-of-use assets
5,517
5,649
1,526
1,139
1,899
1,085
Revolving credit facility
19,915
24,770
1,590
1,590
21,590
-
Trade payables and accrued expenses
17,171
17,171
17,171
-
-
-
42,603
47,590
20,287
2,729
23,489
1,085
The Group establishes an allowance for impairment that represents its estimate of expected losses in respect
of trade receivables, see note 16. Failure to make payments and failure to engage with the Group on alternative
payment arrangements are considered indicators of no reasonable expectation of recovery. The allowance account
for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the
amount owing is possible; at that point, the amounts considered irrecoverable are written off against the trade
receivables directly.
2024
£000
2023
£000
UK
16,535
18,702
Europe
3,457
3,256
Rest of the World
35
100
20,026
22,058
28.2 Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers. The Group’s
exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management also
considers the factors that may influence the credit risk of the Group’s customer base, including the default risk
of the industry and country in which the customers operate. The credit status of each new customer is reviewed
before credit is advanced. This includes external evaluations where possible. Outstanding balances are reviewed
regularly by management.
The concentration of credit risk for trade receivables at the Statement of Financial Position date by geographic
region was:
Financial report
100
Annual Report and Accounts for the year end December 2024
A 10% strengthening of the following currencies against the pound sterling at 31 December 2023 would have
increased/(decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change
occurred at the Statement of Financial Position date and had been applied to risk exposures existing at that date. This
analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant.
The analysis is performed on the same basis for the year ended 31 December 2022.
Profit or loss and equity
2024
£000
2023
£000
€
37
(165)
$
(46)
(52)
28.4 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices, will affect the Group’s income or the value of its holdings of financial instruments.
Market risk – foreign currency risk
The main currency related risk to the Group comes from forward purchasing of inventories and from its foreign
operations. Fixed price forward contracts are entered into to hedge the net exposure to euros and dollars in a
phased manner over a 3 – 6 month period.
The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary
financial instruments except derivatives when it is based on notional amounts.
Sensitivity analysis
A 10% weakening of the following currencies against the pound sterling at 31 December 2024 would have increased/
(decreased) equity and profit or (loss) by the amounts shown below. This calculation assumes that the change
occurred at the reporting date and had been applied to risk exposures existing at that date. This analysis assumes
that all other variables, in particular other exchange rates and interest rates, remain constant.
The analysis is performed on the same basis for the year ended 31 December 2023.
($) Trade payables and accruals includes £13,975k of trade payables and £3,841K of accrued expenses. Deferred income is excluded.
31 December 2024
Sterling
£000
Euro
£000
US Dollar
£000
Other
£000
Total
£000
Cash and cash equivalents
297
1,532
10
-
1,839
Trade and other receivables
19,010
3,600
-
-
22,610
Revolving credit facility
(16,913)
-
-
-
(16,913)
Liabilities relating to right-of-use assets
(4,960)
(477)
-
-
(5,437)
Trade payables and accrued expenses ($)
(13,706)
(3,689)
(421)
(0)
(17,016)
Net exposure
(16,272)
966
(411)
(0)
(14,917)
31 December 2023
Sterling
£000
Euro
£000
US Dollar
£000
Other
£000
Total
£000
Cash and cash equivalents
3,950
1,220
14
-
5,184
Trade and other receivables
20,052
3,763
-
-
23,815
Revolving credit facility
(19,915)
-
-
-
(19,915)
Liabilities relating to right-of-use assets
(4,890)
(626)
-
-
(5,516)
Trade payables and accrued expenses ($)
(10,811)
(5,754)
(484)
(122)
(17,171)
Net exposure
(11,614)
(1,397)
(470)
(122)
(13,603)
Profit or loss and equity
2024
£000
2023
£000
€
(88)
135
$
107
43
101
Sensitivity analysis
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and
profit or loss by the amounts shown below. This calculation assumes that the change occurred at the reporting date
and had been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers
the effect of financial instruments with variable interest rates, financial instrument at fair value through profit or loss
and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for the year ended 31
December 2023.
Variable rate instruments
2024
£000
2023
£000
Financial liabilities (carrying value)
16,913
19,915
2024
£000
2023
£000
Equity
Increase of 100 basis points
(170)
(200)
Decrease of 100 basis points
170
200
Profit or loss
Increase of 100 basis points
(170)
(200)
Decrease of 100 basis points
170
200
28.5 Capital management
The capital structure of the Group is presented in the statement of financial position and includes equity, cash and
borrowings. The statement of changes in equity provides details of equity and note 18 provides details of loans and
overdrafts. Funding requirements are provided by a combination of revolving credit (£20m) and overdraft (£5m)
facilities. The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern
and to have access to adequate funding for business opportunities, so that it can provide returns for Shareholders
and benefits for other stakeholders. The Group manages the capital structure and makes adjustments in the light
of changes in economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust
the capital structure the Group may issue new shares or draw down debt. The Group is not subject to externally
imposed regulatory capital requirements and there are no specific ratios used by the Group in assessing its
management of capital levels.
The Group is subject to covenants in respect of its bank facilities and remains covenant compliant. There were no
changes in the Group’s approach to capital management during each year.
The Group maintains sufficient cash levels to enable it to meet its liabilities as they fall due. Management review
cash flow forecasts on a regular basis to determine whether the Group has sufficient cash reserves to meet future
working capital requirements, financing obligations and to take advantage of business opportunities. In reviewing
cash flows and identifying the need for further funds, management consider the nature of cash flow requirements
and take appropriate action.
Market risk – interest rate risk
Profile: At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:
Financial report
102
Annual Report and Accounts for the year end December 2024
29. Subsequent events
It is the opinion of the directors that there are no material subsequent events to disclose.
Company income statement
Note
2024
£000
2023
£000
Continuing operations
Administrative expenses
(37,160)
(2,244)
Operating loss
(37,160)
(2,244)
Financial income
E
2,000
2,000
Financial expenses
E
(1,462)
(1,499)
Net financing income
538
501
(Loss)/Profit from continuing operations before tax
(36,622)
(1,743)
Taxation
F
467
-
(Loss)/Profit for the year attributable to the owners of the parent
(36,155)
(1,743)
Company statement of financial position
Note
2023
£000
2022
£000
Fixed assets
Investments
I
24,804
59,685
Total fixed assets
24,804
59,685
Current assets
Cash and cash equivalents
2
8
Trade and other debtors
J
74,578
75,965
Total current assets
74,580
75,973
Creditors: amounts falling due within one year
Interest-bearing loans and borrowings
K
-
-
Trade and other creditors
L
12,975
10,980
Total creditors: amounts falling due within one year
12,975
10,980
Net current assets
61,605
64,993
Total assets less current liabilities
86,409
124.987
Creditors: amounts falling due after more than one year
Interest-bearing loans and borrowings
K
16,913
19,915
Total creditors: amounts falling due after more than one year
16,913
19,915
Net assets
69,496
104,762
Capital and reserves
Called up share capital
N
31,637
30,746
Share premium account
61,662
60,959
Other reserves
187
187
Merger relief reserve
453
453
Retained earnings
(24,443)
12,417
Total equity
69,496
104,762
103
(*) Retained earnings and share based payment reserve.
The financial statements on pages 66-108 were approved by the Board of Directors on 8 April 2025 and were signed
on its behalf by:
Russell Cash, Chief Financial Officer
Company Registration Number: 09010518
8 April 2025
Notes to the Company’s
Financial Information
A. Authorisation of financial statements
& statement of compliance with FRS 101
The financial statements of Flowtech Fluidpower plc
for the year ended 31 December 2024 were authorised
for issue by the Board of Directors on 8 April and the
Statement of Financial Position was signed on the
Board’s behalf by Russell Cash. Flowtech Fluidpower plc
is incorporated and domiciled in England and Wales.
These financial statements were prepared in accordance
with Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (FRS 101) and in accordance
with applicable accounting standards. The Company’s
financial statements are presented in sterling.
These financial statements have been prepared on
a going concern basis and on the historical cost
basis except for the modification to a fair value basis
for certain financial instruments as specified in the
accounting policies below.
The principal accounting policies adopted by the
Company are set out in note B.
B. Accounting policies
The accounting policies which follow set out those
policies which apply in preparing the financial
statements for the year ended 31 December 2024.
The Company has taken advantage of the following
disclosure exemptions under FRS 101:
a. the requirement in paragraph 38 of IAS 1
‘Presentation of Financial Statements’ to present
comparative information in respect of:
i paragraph 79(a)(iv) of IAS 1;
ii. paragraph 73(e) of IAS 16 ‘Property,
Plant andEquipment’;
b. the requirements of paragraphs 10(d), and 134-136
of IAS 1 ‘Presentation of Financial Statements’ and
the requirements of IAS 7 ‘Statement of Cash Flows’;
c. the requirements of paragraphs 30 and 31 of
IAS 8 ‘Accounting Policies, Changes in Accounting
Estimates and Errors’;
d. the requirements of paragraph 17 of IAS 24 ‘Related
Party Disclosures’;
Share
capital
£000
Share
premium
£000
Other
reserve
£000
Merger
relief reserve
£000
Retained
earnings (*)
£000
Total
equity
£000
Balance at 1 January 2023
30,746
60,959
187
453
14,988
107,333
Profit for the year
-
-
-
-
(1,743)
(1,743)
Total comprehensive income for the year
-
-
-
-
(1,743)
(1,743)
Transactions with owners
Equity dividends paid (note G)
-
-
-
-
(1,289)
(1,289)
Share options - granted to subsidiary employees
-
-
-
-
462
462
Share options settled
-
-
-
-
-
-
Total transactions with owners
-
-
-
-
(827)
(827)
Balance at 1 January 2024
30,746
60,959
187
453
12,417
104,762
(Loss) for the year
-
-
-
-
(36,155)
(36,155)
Total comprehensive income for the year
-
-
-
-
(36,155)
(36,155)
Transactions with owners
Equity dividends paid (note G)
-
-
-
-
(1,383)
(1,383)
Issue of share capital
891
703
-
-
-
1,594
Share options – granted to subsidiary employees
-
-
-
-
702
702
Share options settled
-
-
-
-
(24)
(24)
Total transactions with owners
891
703
-
-
(705)
889
Balance at 31 December 2023
31,637
61,662
187
453
(24,443)
(69,496)
Company statement of changes in equity
Financial report
104
Annual Report and Accounts for the year end December 2024
e. the requirements in IAS 24 ‘Related Party
Disclosures’ to disclose related party transactions
entered into between two or more members of a
group, provided that any subsidiary which is a party
to the transaction is wholly owned by such a member.
f. disclosure requirements of IFRS 7 ‘Financial
Instruments’.
Investments
Investments in Group Undertakings are recorded at
cost, which is the fair value of the consideration paid.
Investments are tested for impairment and carried at
cost less accumulated impairment losses. The Company
considers impairment of its investment in subsidiaries by
estimating the recoverable amounts of the investments,
which are based on either the net assets of the
subsidiary, or value-in-use calculations.
Employee Benefit Trust (EBT)
The EBT is not treated as an extension of the parent
and therefore not included in the parents individual
accounts and only consolidated in the group accounts.
The costs of purchasing own shares held by the EBT are
shown as a deduction within shareholders equity in the
consolidated statement of changes in equity.
Financial instruments
Non-derivative financial instruments comprise trade and
other debtors, cash and cash equivalents, loans and
borrowings, and trade and other creditors.
Trade and other debtors
Trade and other debtors are recognised at the
transaction price. Subsequent to initial recognition they
are measured at amortised cost using the effective
interest method, less any impairment losses.
Trade and other creditors
Trade and other creditors are recognised initially at
fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest
method.
Cash and cash equivalents
Cash and cash equivalents comprise cash, bank
balances net of bank overdrafts and short-term deposits
held with banks by the Company, and are subject to
insignificant risk of changes in value.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially
at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost using the
effective interest method, less any impairment losses.
Any change in their value through impairment or reversal
of impairment is recognised in profit or loss. Discounting
is omitted where the effect is immaterial.
Derivative financial instruments
Derivative financial instruments held by the Company
include forward foreign currency contracts and
are recognised at fair value. The gain or loss on
remeasurement to fair value is recognised immediately
in profit or loss.
Derecognition of financial liabilities
The Company 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.
Share-based payments
The fair value of employee share plans is calculated
using a variation of the Black-Scholes model. In
accordance with IFRS 2 ‘Share-based payment’, the
resulting cost is charged to the profit and loss account
over the vesting period of the plans.
Where the individuals are employed by the Parent
Company, the fair value of options granted is recognised
as an employee expense with a corresponding increase
in equity. Where the individuals are employed by a
subsidiary undertaking, the fair value of options to
purchase shares in the Company that have been issued
to employees of subsidiary companies is recognised as
an additional cost of investment by the Parent Company.
An equal amount is credited to other equity reserves,
grouped under retained earnings.
Financing income and expenses
Financing expenses comprise interest payable.
Financing income comprises interest receivable on
funds invested. Interest income and interest payable
is recognised in profit or loss as it accrues, using the
effective interest method.
Taxation
Tax on the profit or loss for the year comprises current
and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items
recognised in other comprehensive income, in which
case it is recognised in other comprehensive income.
Current tax is the expected tax payable or receivable on
the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided on temporary differences
between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts
used for taxation purposes. The following temporary
differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit other
than in a business combination; and differences relating
to investments in subsidiaries to the extent that they
105
will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the Statement of
Financial Position date.
A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be
available against which the temporary difference
can be utilised.
Dividends
Dividend distributions payable to equity Shareholders
are included in other liabilities when the dividends
have been approved in general meeting prior to the
reporting date.
Pensions
Company employees are members of defined
contribution pension schemes where the obligations
of the Company are charged to the profit and loss
account as they are incurred.
Significant judgements, key assumptions
and estimates
In the process of applying the Company’s accounting
policies, which are described above, management have
made judgements and estimations about the future
that have the most significant effect on the amounts
recognised in the financial statements. The estimates
and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the
revision affects only that period or in the period of the
revision and future periods if the revision affects both
current and future periods.
Significant management estimates
The following estimates have the most significant
effect on the financial statements.
Impairment of investments
The carrying value of investments are assessed for
impairment. This requires an estimation of the value in
use of the operations underpinning the investments.
The value in use of the investment is calculated from
cash flow projections for the relevant entity based on
financial projections covering a period of 2 years plus a
terminal value, assumed growth rates and discount rates
relevant to the individual entity.
The key assumptions for the value in use calculations
are those regarding discount rates, growth rates
and expected cash flows. Changes in revenues
and expenditure are based on past experience and
expectations of future growth.
The pre-tax discount rate applied in the impairment
review ranged from 14.6% to 18.1% (2024: 12% to 15%).
This discount rate is derived from the Group’s weighted
average post-tax cost of capital.
The carrying value of the investments at 31 December
2024 is £24,804,000 (2023: £59,685,000). The value
in use of investment in subsidiaries is in excess of the
carrying value. Consequently, there was no impairment
charge during the year.
Impairment of Group balances
The carrying value of Group balances are assessed for
impairment based expected credit loss model. At each
reporting date, the management assesses whether any
events have occurred which have had a detrimental
effect on the ability of each of the Group companies to
repay the amounts due.
The amounts owed by subsidiary undertakings were
£74,052,000 (2023: £75,841,000). There was no
impairment charge during the year.
Financial report
106
Annual Report and Accounts for the year end December 2024
2024
£000
2023
£000
Finance income arising from:
Dividends received from Group undertakings
2,000
2,000
Total finance income
2,000
2,000
2024
£000
2023
£000
Finance income arising from:
Bank loans and revolving credit facility, and
amortisation of loan arrangement fee
1,462
1,499
Total finance income
1,462
1,499
Reconciliation of effective tax
rate
2024
£000
2023
£000
(Loss)/Profit for the year
(1,574)
(1,743)
Total (credit)/tax expense
466
-
(Loss)/Profit excluding taxation
(1,108)
(1,743)
Tax using the UK corporation tax
rate of 23.52% (2022: 19.00%)
(394)
(410)
Impact of change in tax rate on
deferred tax balances
-
-
Deferred tax movements
not recognised
-
-
Group relief
295
880
Income not taxable
(500)
(470)
Adjustments in respect
of prior periods
(2)
-
Amounts not deductible
136
-
Total (credit)/tax expense in the
income statement
(467)
-
2024
£000
2023
£000
Renumeration
813
695
Bonus
-
61
Social security costs
105
96
Benefits in kind
5
9
1,013
863
2024
£000
2023
£000
Highest paid Director’s remuneration
Renumeration
363
134
Compensation for
loss of office
-
169
Bonus
-
-
Social security costs
49
32
Benefits in kind
1
7
Total highest paid
Director’s remuneration
413
342
2024
£000
2023
£000
Audit of the statutory financial statements
of Flowtech Fluidpower plc
112
95
2024
£000
2023
£000
Administration
6
7
C. Services provided by the Company’s auditor
During the period, the Company obtained the following
services provided by the Company’s Auditor at the costs
detailed below:
E. Financial income & expense
Finance income for the year consists of the following:
F. Taxation
D. Directors & employees
Details of Directors and employees are shown in
note 5 to the consolidated financial statements. The
average number of persons employed by the Company
(including Directors) during each year was as follows:
The aggregate payroll costs of these persons were as
follows:
Finance expenses for the year consist of the following:
The amounts set out above include remuneration in
respect of the highest paid Director as follows:
107
Financial report
2024
£000
2023
£000
Final dividend of 2.2p (2022: £2.1) per share
1,383
1,289
Total dividends
1,383
1,289
G. Dividends
Investments in
subsidiaries’
unlisted shares
£000
Subsidiaries’
share-based
payment reserves
£000
Total
£000
At 1 January 2023
59,024
508
59,532
Additions net of exercise of options in the year
-
153
153
At 31 December 2023
59,024
661
59,685
At 1 January 2024
59,024
661
59,685
Additions net of exercise of options in the year
-
167
167
Impairment
(35,048)
-
(35,048)
At 31 December 2024
23,976
828
24,804
I. Dividends
2024
£000
2023
£000
Current:
Deferred tax asset
466
-
Prepayments and accrued income
60
124
Amounts owed by Group undertakings *
74,052
75,841
Total trade and other debtors
74,578
75,965
J. Trade and other debtors
2024
£000
2023
£000
Non-current liabilities:
Revolving credit facility
16,913
19,915
Total non-current liabilities
16,913
19,915
Total current liabilities
-
-
Total interest-bearing loans and borrowings
16,913
19,915
K. Interest-bearing loans and borrowings
The final dividend of 2.2p in respect of FY24’s performance was paid on 19 July 2024. There will not be a dividend in
FY25 related to FY24’s performance.
H. Share-based payments
Details of share-based payments are shown in note 22 to the consolidated financial statements.
*Amounts owed by group undertakings are payable on demand. An exercise has been undertaken to assess the recoverability of Group debtors under IFRS 9 and established
the expected credit loss provision required is immaterial and has not been recognised.
108
Annual Report and Accounts for the year end December 2024
2024
£000
2023
£000
Social security and other taxes
225
157
Accruals and deferred income
246
253
Amounts owed to other Group undertakings
12,505
10,570
Total trade and other creditors
12,976
10,980
L. Trade and other creditors
2024
£000
2023
£000
At start of year
1
1
Total deferred tax credit in profit and loss account for the year
465
-
At end of year
466
1
M. Deferred taxation
Number
£000
At 1 January 2024
61,275,173
31,632
At 31 December 2024
61,275,173
31,632
N. Share Capital
O. Contingent liabilities & commitments
The Company has no capital expenditure contracted for but not provided as at 31 December 2024 (2023: nil).
P. Related party transactions
The Company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions
with entities that are wholly owned subsidiaries of the Flowtech Fluidpower plc Group. Amount owing by Flowtech
Fluidpower Employee Benefit Trust is £54,000 (2023: £124,000) remains outstanding. There are no other related
party transactions other than those relating to Directors that have been disclosed in note 26 to the consolidated
financial statements.
Q. Ultimate controlling party
The Directors consider that there is no ultimate controlling party.
109
The Group uses a number of alternative performance measures (“APMs”) in addition to those measures
reported in accordance with IFRS. The APMs are useful to assess the underlying performance of the Group
by excluding any one-off, non-operating and non-cash items. Items excluded in this way are grouped under
separately disclosed items on the face of the income statement. In doing so, the APMs provide comparability and
consistency of trading performance between periods.
The APMs are used to manage and budget for the Group’s performance, and for determining the performance
rewards for Executive Directors and that of other management throughout the business. The APMs are also used in
presentations to investors to communicate the underlying performance of the Group.
The APMs are described in detail, and reconciled to IFRS measures in the table below:
Underlying Operating Profit
Underlying Operating Profit is the measure used by the Directors to assess trading performance of the Group. In the
context of presenting the performance of the Group’s segments, this measure is referred to as Underlying segment
result or underlying operating result, as appropriate. The reconciliation of this APM to the Operating profit in the
Consolidated income statement is shown below:
Glossary of terms
2024
£000
2023
£000
Underlying operating profit (result)
2,650
5,989
Less Separately disclosed items:
- Acquisition costs
(41)
- Amortisation of acquired intangibles (note 11)
(820)
(906)
- Impairment of acquired intangibles (note 11)
(241)
-
- Impairment of goodwill (note 10)
(246)
-
- Impairment of leased assets (note 21)
(25,070)
(13,026)
- Share-based payment costs (note 22)
(284)
- Release of lease liability of property closed in FY23
(81)
(456)
‘- Negative goodwill
(729)
(462)
- Restructuring
-
(412)
2,205
Operating profit
(2,581)
(1,919)
(27,888)
(16,356)
(25,238)
(10,367)
110
Underlying EBITDA
Underlying EBITDA is another measure used by the Directors to assess trading performance of the Group.
The below reconciliation reconciles to Underlying Operating profit:
Underlying operating overheads
Underlying operating overheads is total of distribution costs and administrative costs before separately disclosed
items. The APM has been introduced this year to spotlight the management of overheads attributable to “business
as usual” trading activity in the current inflationary environment.
The calculation for Working Capital is shown below.
2024
£000
2023
£000
Underlying EBITDA (result)
5,941
9,372
Less Depreciation and Amortisation
- Amortisation of website (note 11)
(228)
(210)
- Depreciation of fixed assets (note 10)
(1,537)
(1,363)
- Depreciation of ROU Assets (note 21)
(1,526)
(1,810)
(3,291)
(3,383)
Underlying Operating Profit
2,650
5,989
Lines in Income statement
2024
£000
2023
£000
Administrative expenses before separately disclosed items
34,196
30,740
Distribution expenses
4,169
4,534
Total
38,,365
35,274
Net Debt
Net Debt is Bank Debt less the value of cash and cash equivalents. It excludes lease liabilities under IFRS 16.
Bank Debt is the value of Barclays RCF facility of £17m and any utilised value of £5m overdraft facility, less any
unamortised value of loan arrangement fee referred to in note 18.
Net Debt is a key APM used by the Directors to monitor the indebtedness of the Group.
2024
£000
2023
£000
Cash and Cash equivalents (Note 17)
1,839
5,184
Interest bearing borrowings (Note 17)
(16,913)
(19,915)
Net Debt
15,074
14,731
Working Capital
Working Capital is inventories (note 15), trade and other receivables (note 16) and prepayments less trade and other
payables (note 19). The APM is used to monitor the working capital levels across the Group, with a view to manage
the indebtedness of the Group within the desired levels.
The calculation for Working Capital is shown below.
2024
£000
2023
£000
Inventories (Note 15)
29,263
32,009
Trade and other receivables (Note 16)
22,740
23,725
Prepayments
1,053
856
Trade and other payables (Note 19)
(20,866)
(21,558)
Working capital
32,190
35,032
Glossary of terms
Flowtech Fluidpower PLC
Registered Office
Bollin House, Bollin Walk
Wilmslow, Cheshire
SK9 1DP
T: +44 (0) 1695 52759
E: investorrelations@flowtech.co.uk
W: www.flowtechfluidpower.com
Company Number
09010518
Company Secretary
Russell Cash
Solicitors
DLA Piper UK LLP
1 St Peter’s Square
Manchester, M2 3DE
Company Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds, LS1 4DL
Bankers
Barclays Bank PLC
1 Churchill Place
London, E14 5HP
Investor & media relations
TooleyStreet Communications Ltd
Third Floor, 2 Chamberlain Square,
Birmingham, B3 3AX
Auditor
Grant Thornton UK LLP
Landmark
St Peter’s Square
1 Oxford Street
Manchester, M1 4PB
Nominated adviser
and joint stockbroker
Panmure Liberum Capital Limited
Ropemaker Place
Level 12
25 Ropemaker Street
London, EC2Y 9LY
Joint broker
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX