Flowtech Fluidpower PLC Business Update - COVID-19;Notice of Final results (5042I)
02 Aprile 2020 - 8:00AM
UK Regulatory
TIDMFLO
RNS Number : 5042I
Flowtech Fluidpower PLC
02 April 2020
T hursday, 2 April 2020
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Flowtech Fluidpower plc
("Company")
Business Update - COVID-19 and Notice of Final results
It is at times such as this we are all forced to reflect on what
is most important to us. When family, friends and colleagues are
faced with challenges that would have been inconceivable only a few
weeks ago, we need to be there to support them.
With that in mind we are guaranteeing that all our staff,
whether currently working or furloughed, will continue to be paid
in full, at least until the end of April when we will review the
situation . For those that are working but cannot work remotely, we
have implemented robust self-distancing procedures. We also
recognise that there are several of our smaller suppliers and
customers already under stress, and we will be trying to assist
them as much as we can. Ultimately, the best thing we can do for
all our stakeholders is to ensure that when life does return to
normal, the measures we take during this upheaval leave us stronger
in every respect.
Trading position
During Q1 t he business has performed in line with our
expectations at the time of the February trading update. Naturally
the final few weeks of Q1 suggest an altogether different position
going into Q2. While several of our suppliers and customers have
suspended operations, these currently only account for 10-15% of
revenue, and there has been little slippage in customer receipts
helped enormously by the timely Government action. Overall,
revenues are currently trending down by around 30%, with
expectations that volumes may dip further before recovering.
Therefore, we do not believe it prudent to provide formal guidance
for the current financial year.
However, factoring in the cash savings from all elements of the
Government support mechanisms, we would need a prolonged 35% drop
in revenue run rates before the business becomes broadly
break-even. This is based on furloughing 181 of our 590 UK and ROI
employees, combined with similar support from the Dutch/Belgium
Governments. Should the need arise, we have scope to make further
cost savings.
Net debt at 31 March 2020 was GBP 15.6 m , a GBP1m reduction
from the position at 31 December 2019. We have recently extended
our aggregate banking facilities of GBP25m out to the end of June
2021. Discussions with our Bank are constructive, and they are
looking to support us in ensuring all covenants are complied with,
and to secure extended facilities beyond the 15-months remaining
with our existing arrangements.
W e continue to pursue our rationalisation and cost reduction
programmes. These centre around the implementation of operational
efficiencies in relation to our procurement and warehousing
activities, as well as the centralisation of back office functions.
Over time we hope to achieve further significant reductions in both
working capital and operating costs. Despite the short-term trading
disruption, the business should generate positive cashflow through
2020 and 2021, helping to further reduce net debt
Dividend
Although in our February update we indicated that we would look
to propose a final dividend, given current levels of uncertainty it
is prudent that we suspend all dividend payments and retain as much
cash in the business as possible until the situation becomes
clearer.
Summary
These circumstances are undoubtedly the biggest challenge most
of us will face in our lifetimes, but Flowtech has a culture and a
business model that we believe will prove resilient. If we continue
to act calmly and responsibly, then all those that depend on us can
be confident in the long-term success of the business.
Notice of results
We will provide a further trading update on the release of our
2019 results, scheduled for 21 April 2020.
Enquiries to:
Flowtech Fluidpower plc
Malcolm Diamond MBE, Non-Executive Chairman
Bryce Brooks, Chief Executive Officer
Russell Cash, Chief Financial Officer
Tel: +44 (0) 1695 52796
Zeus Capital Limited (Nominated Adviser and Broker)
Andrew Jones, Kieran Russell (corporate finance)
Dominic King, John Goold (sales & broking)
Tel: +44 (0) 161 831 1512
finnCap Limited (Joint Broker)
Ed Frisby, Kate Bannatyne (corporate finance)
Rhys Williams, Andrew Burdis (sales & broking)
Tel: +44 (0) 20 7220 0500
TooleyStreet Communications (IR and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523 or email : fiona@tooleystreet.com
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END
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