Share Name Share Symbol Market Type Share ISIN Share Description
Flowtech Fluidpower Plc LSE:FLO London Ordinary Share GB00BM4NR742 ORD 50P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 72.00 9,540 08:48:32
Bid Price Offer Price High Price Low Price Open Price
71.20 73.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Alternative Energy 112.42 4.71 6.12 11.8 44
Last Trade Time Trade Type Trade Size Trade Price Currency
13:04:55 O 980 71.60 GBX

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Date Time Title Posts
14/10/202016:46Flowtech Fluidpower612
22/3/201814:18Interview with Zeus Capital: Flowtech Fluidpower1
29/7/200818:56Go with the FLOMERICS - Lowly rated growth and short term arb play1,783
28/3/200815:31Where is Flomerics Heading?54

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Flowtech Fluidpower Daily Update: Flowtech Fluidpower Plc is listed in the Alternative Energy sector of the London Stock Exchange with ticker FLO. The last closing price for Flowtech Fluidpower was 72p.
Flowtech Fluidpower Plc has a 4 week average price of 69.60p and a 12 week average price of 64.20p.
The 1 year high share price is 132.50p while the 1 year low share price is currently 44p.
There are currently 61,492,673 shares in issue and the average daily traded volume is 64,705 shares. The market capitalisation of Flowtech Fluidpower Plc is £44,274,724.56.
edmundshaw: " it still remains difficult to predict short term market conditions, we therefore consider it prudent to withhold both formal financial guidance and the payment of a dividend. We will keep this position under constant review and intend to reinstate both guidance and dividend as soon as is practicable." Recall last year of paid dividends was 6.17p. That in itself should support a price around 120p+ and more if some growth is added to the mix. I do not expect us to go ex-growth even if acquisitions are on pause for now....
davebowler: Zeus; Today’s interim results provide detail to the comprehensive update released in late July (28th). The business traded profitably in each month of H1 apart from April, despite lockdown, reporting adj. operating profit of £0.9m (HY19: £6.1m). Importantly, cash generation remained resilient and net debt declined to £14.5m (HY19: £18.8m), a £2.1m reduction over the six-month period. The resilience of Flowtech’s model is highlighted by revenue declining to c. 60% of normalised levels during April, the month with the most stringent lockdown measures in place and when many industries were completely shut down. This is a strong performance relative to other industrial companies and distributors. As expected, formal guidance is still suspended but will be reintroduced when the operating environment stabilises. Flowtech is coming through FY20 in better shape than most businesses and its earnings recovery will benefit from operational gearing as cost savings come through. This is not reflected in the share price, using the depressed FY19 earnings, the shares are trading on 6.7x historic earnings. § Resilient and profitable performance in H1: Revenue declined 21.8% to £46.6m (HY19: £59.6m). Gross margin was resilient at 35.1% (HY19: 35.6%) leading to an adj. operating profit of £0.9m (HY19: £6.1m) and adjusted PBT of £0.6m (HY19: £5.6m). Net debt of £14.5m is c. £1.0m lower than stated in March, despite lockdown. The reduction in the working capital commitment is a structural change within the business and it will not materially increase as revenue normalises. With net debt continuing to fall during H2 and new banking facilities in place, the balance sheet is in a strong position. § Improving revenue trends will see an improvement in profitability in H2: April bore the brunt of the lockdown impact with revenue declining 41%. Since restrictions started to ease, Flowtech has seen four months of steadily improving revenue trends with August 12% down yoy. This should continue as it annualises easier comps in Q4 and should result in H2 profitability being higher than H1, albeit down yoy. Short term visibility has improved during the summer but the medium to longer term outlook remains unclear. The economic fallout post government support schemes coming to an end during the autumn make forecasting difficult, exacerbated for businesses such as Flowtech that have short term order books (c. six weeks). However, Flowtech’s focus on MRO markets will see it weather a prolonged downturn better than most, as evidenced by its performance to date this year. § Valuation compelling on recovery potential: On depressed FY19 earnings the shares are trading on 6.7x and 6.1x EV/EBITDA (with the caveat net debt in FY20 will be lower than FY19A).
pugugly: Accounts out - "However, as it still remains difficult to predict short term market conditions, we therefore consider it prudent to withhold both formal financial guidance and the payment of a dividend. " Working hard but Fincapp target of profit note of 13th Feb gone to money heaven - Howeer debt down and margins only fractionally impacted but with reduced revenue bottom line severely impacted by failure to reduce overheads in line. but (imo) looks like a survivor - $64k question - Market reaction??
edmundshaw: Looking at recovery potential of 50%+ in the share price medium term. I'd say that was quite a bit higher than the average (non-financial) stock in the UK market, some of which have recovered quite a bit, and with debt controlled and a pretty robust business model, this is a firm hold/buy for me.
davebowler: Zeus- Breakeven performance in Q2 and profitable in H1 indicates a resilient FY20 performance The strength and resilience of Flowtech’s operating model is increasingly apparent. HY20 revenue is down c. 22%, at this level the business will have remained profitable, albeit modestly. Even in Q2, when revenue was down c. 33%, the business should have been broadly breakeven. This is a very strong performance relative to other industrial distributors. Net debt continues to fall and is expected to be lower this year. £14.6m was reported at the end of June, a £1.0m reduction since March, despite the impact of COVID-19. The potential for cost savings in unison with a continued focus on working capital to reduce debt make us firmly believe that Flowtech does not need to raise additional equity. As we had expected, formal guidance is still suspended but will be reintroduced when the operating environment has stabilised. Flowtech will weather the COVID 19 impact better than most UK Industrial businesses, this is not reflected in the share price. Using the depressed FY19 earnings, the shares are trading on 6.7x historic earnings. § The business has remained profitable during H1: April, with revenue down 41% yoy, is the only month we believe the business will have lost money, having previously stated that it would be breakeven trading down c. 30% for an extended period of time. As a result, the business will have been modestly profitable during H1, despite revenue being down 22%. § Improving trends into H2; guidance will be reinstated once stability returns: May saw an improving trend as lockdown measures started to ease and the Government encouraged businesses to get back to work. This has continued into June, which was 25% down yoy, and July, that is seeing a further step up in demand with revenue improving 15% on June. End markets, and the wider economy, are in the recovery phase making it difficult to forecast underlying demand. Once stability and visibility improve formal guidance will be reintroduced. § Restructuring, cost saving and working capital initiatives already in place: In terms of assessing potential efficiencies, Flowtech was ahead of the curve having already implemented strategies to save costs, restructure and realign the business while remaining focused on managing working capital. However, an additional £1.0m of savings has been identified and announced today. § Valuation difficult to assess on current economic outlook but Flowtech has strong recovery potential: Using depressed FY19 earnings the shares are trading on 6.7x. On EV/EBITDA, again using FY19A EBITDA and net debt (bear in mind FY20 net debt will be lower than FY19A), the multiple is 6.0x.
davebowler: loafofbread posted this elsewhere- River and Merc released their report this morning. PORTFOLIO ACTIVITY - NEW POSITIONS AND EXITS ....... Flowtech Fluidpower is a specialist distributor of fluid power products in the UK. The business has demonstrated consistently attractive gross margins. This is a self-help, Recovery investment case as cost savings and working capital synergies can improve margins and returns. The position was also acquired at an attractive valuation, despite our view that the business is under-earning, providing the prospect of material share price gains. ....
egrid1: Mon 17 Feb 2020 07:00 RNS Number : 1342D Flowtech Fluidpower plc, the UK's leading specialist supplier of technical fluid power products, announces that it has been notified that Russell Cash, Chief Financial Officer of Flowtech, has purchased a total of 19,605 ordinary shares of 50 pence each in the Company ("Ordinary Shares") on 14 February 2020 at an average price of 103.9 pence per Ordinary Share. Not a massive purchase, but it is usually good when CFO's are buying.
fillspectre: Thanks shaker44. The way I see it - it is a lot easier to load up on shareholders' equity and go on a spending spree. Whilst this is happening some commentators cotton on to the fact that outwardly it is a great growth story. The share is recommended and the price increases. Then the music stops. It is revealed the purchases weren't quite as keen and well researched as previously made out. The person leading the buying frequently disappears as they don't necessarily want to be pinned back to doing the assimilation and finding the cost savings that will turn the enlarged business profitable. Others more suited or more willing take over the reins and start the hard business of running the business as well as they can. The story isn't as compelling and interest is lost. Which is the better investment? Difficult to say - if you can ride the upwave and get out near the top from a purely share price view it has to be the former. If you want to ensure you invest in a business that may have a long term future and may put a floor under the share price with actual profits - could be the latter. Fils
fillspectre: I'm beginning to think everyone has decided to go away in May. Share volumes down across many shares I'm watching including this one and SDI. However the FLO share price is holding up - I'm still convinced there is a floor at 135p due an institution being interested. Is anyone tempted by the AGM in Wilmslow on the 5th June. One of the votes it to accept the dividend and if that passes which I'm sure it will the share goes ex-dividend the next day for 4.04p. Fils
grosvenor: Inv Chronicle Wednesday:- Aim-traded shares in Skelmersdale-based Flowtech Fluidpower (FLO:120p), the UK's leading specialist supplier of technical fluid power products to around 5,000 distributors and resellers, have been marked down by 30 per cent following a modest profit warning yesterday and are back to the 118p level at which I first advised buying ('A fluid performance', 2 Jun 2014). True, total dividends of 21.5p a share paid in the past four years cushion the blow to some extent, but that’s not the point as I was positive on the investment case in early summer when the shares were priced at 159p (‘FlowtechR17;s fluid performance underrated’, 1 Jun 2018). They subsequently hit a high of 195p by the end of that month and shareholders also banked a final payout of 3.85p, so the reversal has been dramatic. It’s also a reversal that is completely overdone for a raft of reasons in my view. Firstly, announcing board room changes at the same time as a profit warning is not ideal, and undoubtedly accentuated the share price slide. Chief executive Sean Fennon, who has held that position since 2009, is retiring for close family reasons from the business at the end of 2018. I can fully understand why he is stepping down and respect why he doesn’t want his personal life broadcast across the media. Bryce Brooks looks an able replacement as chief executive having joined Flowtech as finance director in 2010 and overseen an acquisition strategy that has doubled the company’s operating profits in the past five years. Mr Brooks will be replaced as finance director by Russell Cash who is a former Baker Tilly partner and holds the same position at Manchester-based FRP Advisory LLP. Mr Cash is an interesting appointment as Mr Brooks outlined during our lengthy results call. Flowtech will be pursuing a cash focused strategy to improve return on capital alongside tighter working capital management across its multiple operational businesses. Secondly, the profit warning was not major. Joint house broker Zeus Capital only reined in its 2018 adjusted pre-tax profit estimate by £700,000 to £10.7m on maintained revenue estimates of £107.6m, and clipped its 2019 profit estimate by £1m to £12.1m on forecast revenue of £115m. The other joint broker finnCap has similar estimates which support EPS estimate of 14.9p this year and 16.2p in 2019. The main reason for the downgrade is that analysts at Zeus are factoring in higher operating costs from acquisitions made over the past nine months which has added £2.2m to their previous operating cost estimates this year, and about £2.6m in 2019 to reflect costs incurred to streamline the cost base. Gross margin of 35.5 per cent in the six months to end June 2018 was actually 1.5 percentage points higher than Zeus’ previous estimate. That’s worth noting as the additional gross margin earned is offsetting the higher operating costs. Importantly, revenue estimates have not been trimmed back. Also, analysts have little in the way of cost savings actually embedded in their 2019 assumptions apart from £0.5m of savings already being targeted from an acquisition made in March 2018 (see below). That could prove conservative as acquisitions made have higher cost bases than Flowtech, so there should be savings to be gained in areas such as procurement, back office functions and operational efficiencies. Thirdly, a delay in delivering a £1.5m contract on a Thames Tideway hasn't help sentiment although this is hardly a major bear point. A more cautious tone in the trading outlook may have unsettled investors, and in particular signs of softening of growth prospects within Flowtech’s Power Motions Controls (PMC) business which designs, assembles and supplies engineering components and hydraulic systems so has more project-based work. However, this needs to be put into perspective as PMC only accounted for a third of Flowtech’s first half operating profit, and the much larger and higher margin Flowtechnology distribution business (which has a profit margin three times higher at 19.3 per cent) continues to benefit from positive tailwinds and upside from acquisitions too. Indeed, Beaumanor Engineering, a Leicester-based fluid power equipment distributor has traded strongly since being acquired by Flowtech in March 2018, vindicating the decision to raise £11m at 170p a share in placing to fund the bolt-on deal. In any case, it’s only trading in part of the PMC business that is proving less benign and the contributions from 90 per cent plus of Flowtech’s businesses (by revenues) are highly predictable. One would expect this solidity given that Flowtech’s distribution unit offers over 100,000 individual product lines to more than 80,000 industrial maintenance, repair and overhaul end-users in the UK and Benelux, so has a dominant market position. Fourthly, investors have completely misinterpreted the company’s working capital position and its debtor management. Due to the timing of the acquisition in March, receivables increased sharply from £20.9m at the end of 2017 to £27.2m, and inventories were up by £4.6m to £29m. However, average debtor days actually improved in the six-month period. There is absolutely no issue with late payment of accounts. Mr Brooks confirmed that bad debts account for a miniscule 0.2 per cent of turnover and there has been no change in debtors overdue. Furthermore, receivables have been cut to £26.3m since the end of June. Fifthly, the company’s finances are in actually in good health. Flowtech has a £16m revolving credit facility and £4m senior debt facility, both of which are priced at 2 per cent above LIBOR, and a £5m accordion facility with its lenders. At the end of June 2018, net debt was £18m, so well within these facilities. What has not been disclosed in the interim results, and which I can reveal, is that although net borrowings have been cut from £18m to £17.5m since the end of June 2018, Flowtech has also made £895,000 cash payments to settle the deferred consideration on past acquisitions. Moreover, the year-end net debt figure of £17.6m forecast by both Zeus and finnCap is stated after taking into account a further £2.15m of earn-outs between now and the end of the year. This is well worth noting because it illustrates the highly cash generative nature of the business. It also means that the deferred and contingent liabilities of £5.7m in Flowtech’s balance sheet at the end of June 2018 will be reduced to only £2.65m by the end of the fourth quarter of 2018, so can be easily covered by the operational cash flow from the business. There is absolutely no issue with settling deferred consideration. Sixthly, the board has created the role of group credit manager and made an appointment with the successful applicant due to join Flowtech in the fourth quarter, so expect cash collection rates to improve further and reduce the amount of capital tied up in working capital. This can only improve stock turn and return on invested capital in the business. In terms of cash flow generation, Zeus’ free cash flow estimate of £9.3m for 2019 is actually £400,000 higher than its previous estimate. It is based on £12.5m of operating cash flow less taxation (£2.4m) and interest payments £0.4m). Free cash flow should cover the forecast dividend (6.4p in 2019) almost three times over while offering scope for Flowtech’s board to reduce current net debt of £17.6m by around a fifth by the end of 2019. The fact that earn-outs will be much less next year adds further substance to the scope to reduce debt markedly. The bottom line The combination of boardroom changes, rising inventories and receivables mainly due to the timing of an acquisition, higher debt levels, and a small profit warning have clearly spooked investors, but the reaction has been overly harsh for the reasons I outline above. Ignoring the possibility of earnings growth coming through in 2019, the shares trade on a PE Ratio of 8 for 2018 based on adjusted EPS rising from 14p to 14.9p, and offer a 5 per cent prospective dividend yield based on raised payout of 6.1p a share for the 2018 financial year (the interim payout was hiked by 5 per cent to 2.03p a share, hardly a sign of distress). In my book that’s value. The current valuation is also discounting a dramatic drop off in trading in the next year which is highly unlikely, Brexit or non-Brexit. When the dust settles and investors take into account each of the six factors I have addressed, then I can see scope for Flowtech’s share price to recover most of this week’s share price decline. It may take time, but the high yielding shares have recovery potential at this depressed level. Buy.
Flowtech Fluidpower share price data is direct from the London Stock Exchange
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