Flowtech Fluidpower (LSE:FLO) — Interim results for the six months ended 30 June 2026

0:56 Good morning, and welcome to the FLOWTECH FLUIDPOWER PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press end. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mike England, CEO. Good morning, sir.

1:27 Thank you, Lily. Good morning, everybody. Thank you for joining us today. Really appreciate you taking time out of your busy schedules right at the start of September. I hope everybody's had a good summer. We're looking forward to giving you an update on our first half trading today. For those of you that are new to the FLOWTECH story, I'm Mike England. I'm the CEO. Joined in April 2023. Prior to joining FLOWTECH, I was with RS Group PLC for just under eight years, which is a global distribution business. And prior to that, I was with Brahma PLC, a maintenance repair and operations, European distribution and service business. And prior to that, I was with Rexel, electrical distribution company, for about nine years. So I've had about thirty years of experience in industrial distribution and services and excited to report on our progress today now that we're certainly driving the platform for growth that we've been working hard to create over the last three years.

2:26 Russ, just a quick introduction, please. Yeah. Very quickly. It's amazing how time flies. I'm closing on eight years at FLOWTECH FLUIDPOWER as the chief financial officer. This next bit makes me feel really old. Prior to FLOWTECH, I had a thirty year career in professional services, and the significant majority of that was in the world. The turnaround of restructuring, that came in and continues to come in useful when we come across distressed acquisition opportunities. We've spoken about that in the past. We'll speak a little bit about that in this presentation. So all in all, close to eight years and the last three and a half years of which have been working alongside Mike and a relatively refreshed leadership team in that period.

3:13 Thanks, Russ. So just our agenda today. We're not reinventing the wheel. It should look fairly familiar if you've been on other FLOWTECH investor calls. We're going to just give a brief reminder of our strategy. Always

3:26 appreciative that people might be joining us for the first time, so it's useful just to quickly talk about the journey that we've been on so that you can understand the journey that we're on now. The financial update for the first half and and, clearly, the the thoughts that we've got on on current trading towards the outlook. And within that, then the business highlights, which is important. We're gonna bring to life some really good examples, I think, of progress and try and create some tangibility around that as well. There is an appendix at the end. This just details our top shareholders, which is a question that's often asked, and just then a little bit more information about FLOWTECH and the market that we operate within for those that are interested. So just moving on to our our strategy. As an organization, we've got a broad reach and capability from being able to supply a single component through a high service distribution model all the way through to delivering integrated engineering systems and some complex turnkey projects. And we do that across power motion and control solutions.

4:30 We're always looking at driving our business in the most cost effective way for our customers, and we work very, very strongly with some of the largest and most strategic global brands in the world as it relates to power motion and control. And we're also very, very particular about making sure that we have the very best people. And and particularly in what we do, making sure that people with high technical skills and highly skilled engineers, because we're a specialist in our market rather than a generalist. Just a picture on the right hand side here, there's a project that we we completed, like, last year. This is a hydraulic cylinder, and this helps the ferries to to unload in a port. This was a very large scale project in replacing a a link span hydraulic cylinder, which we which we worked on as a team.

5:22 So it just gives you an idea of some of the size and scale of some of the projects. Equally, there's many, many parts of that picture, whether it be on the boat, whether it be on the port side, where there's hydraulic components or fluid power components that we can supply just to be able to keep maintenance operations running. And those are the the types of opportunities that we look for. When I sort of reflect back to joining in April, I guess the vision was was to get the business to where we we we got to at the start of this year, which was having a very much an integrated platform. The world of motion underpins very much our brand. We've consolidated around 17 brands over the last over the last three years, three and a bit years, all under one FLOWTECH, and we've also added in five other businesses that we've acquired during that period, which we're gonna come on to. But in reality, what we wanted to do and we're very passionate about was creating a very strong brand identity in a world of motion. And motion control really does sit across all industry sectors.

6:24 It's very much across infrastructure. And the the core of our business is in three areas of technology. One is hydraulic systems, which typically helps power heavy lifting in construction, equipment, in infrastructure, anything that's that's moving heavy loads, pneumatic systems, which is about compressed air, which is typically driving high speed automation and precision control. So you see a lot of that in highly automated factory environments, for example, in robotics, and process control systems where we're looking at regulating pressure, temperature, and flow, and that's very much around safety, efficiency, and consistency. And wrapped around those technologies increasingly with the the drive for electrification sustainability is the the introduction of electronic technology, electrical technology within FLUIDPOWER. And and so that board of motion is is expanding. And I'll come on to that in terms of market size because that does give us a great opportunity and a runway for future growth. Through the integration plan that we've running, which I'll come on to, we've now built an integrated platform. We go to market through three very clear value streams. The first is products.

7:33 We have high service distribution supported by our A brand partners, we hold significant stock in our three markets, The UK, Ireland, and The Benelux. And we also export to over 80 countries around the world. And that very much is if you need it quickly, we can get it to you quickly. High stock availability, high service. From a services point of view, the second value stream, this is very much where we're looking at diagnostics repair. We will manufacture and subassemble systems on behalf of original equipment manufacturers or systems builders or companies that are looking to maintain their operations. And we have on-site services teams as well who are driving systems optimization. And then finally, the third value stream is projects, and we'll give you some good examples of this today. It's a very strong growth area for our business where we're designing, building, and integrating complex systems in some large scale projects.

8:25 We work across a very fragmented and complex supply chain. You know, we we want customers that have a real specialist supply requirement, and we combine that distribution capability with that engineering expertise. So we work with global component manufacturers. We supply into the trade who are then supplying into the end markets. We also support directly systems builders either with components, but also by building systems for them that could be subassembled systems that are going into a finished product. We support maintenance providers and, end users that are operating critical assets. And everything that we do as a business is very much inside the heart of industry and infrastructure where there is movement. Anything that you see that is moving, typically, it will have some sort of hydraulic pneumatic or process equipment equipment within it.

9:14 We are at the dirty end of the market. I would say that this is something which is a very sustainable space. And when I say dirty end, what I mean here is is that this is very much helping companies to get their machinery running or to building machinery. And, also, we're working with some high end market segments where quality and high standards such as oil and gas, nuclear, aerospace really matters. And certainly in our our build environments and our production environments, those are critical sectors for us as well. Our strategic plan was introduced at the start of twenty twenty three. This was laying out a very, very clear and solid foundation for growth. We're focusing in three areas. Customer first, really driving a customer first culture, but, ultimately, how do we increase our customer base, how do we diversify, but also how do we create an omnichannel approach? And we'll come on to this, but we have been in the background building a new digital platform so that we can ultimately start to give customers a greater experience in the omnichannel world. We with the platform that we've built and that focus on customers, we can outgrow the market by two x. And certainly, the growth rate in the first half of this year, we feel, is is is a journey towards that. The power of one is very much been consolidating our businesses all under one brand. But importantly, how do we take our complete offering to market through a consolidated and differentiated value proposition and also building an operating model in the organization that's fit to scale? This This is is a a large market. I'll come on to that in a second.

10:42 And we do want to build the business for growth. So we have a regional operating model, but we've built some very, very core group functional capability that as we scale will certainly help us to grow faster and become more efficient. And that's why we believe that over time, we can take this business to mid teen EBITDA margin. A world of motion, as I as I explained, is how we expand our product offering into that wider world of motion. That market within Europe alone is 30,000,000,000. It's a 30,000,000,000 market opportunity. So there's plenty of headroom for growth, and it's a very fragmented market. And our goal here is to expand our products, our services, and our geographical reach both organically, but also inorganically over time. And then finally, we've detailed out six very clear growth engines, and everything that we do as a a leadership team is very much focused around these six areas. I'm not going to labor on that today, this is very much driving our value creation plan. And, clearly, we've got some key initiatives under each of these areas. Some of those are bring to life today.

11:44 And then just in summary, that road map since 2023 and where we are today was a period of initially diagnostics, putting in controls, and putting in place an immediate performance improvement plan. There was quite a lot of areas that needed improvement at the beginning, both operationally in terms of our service, our stock management, our commercial discipline, our selling effectiveness, marketing effectiveness, but also our IT and digital infrastructure. Twenty four to twenty five has been very much done around restructuring the business model, as I described, getting the right organizational design in place, powering up our leadership and our core capabilities within the business, integrating the business all under one FLOWTECH, driving simplification into the model. And then in '25, we were very pleased to launch in August last year the new digital platform in The UK, and we'll be able to give you some updates on that today and also really restoring some some disciplined growth focus across the three regions. And then here we we are are in in 2026 and beyond, and we're very much now through that transformation phase, and we're looking at leveraging our growth platform and embedding that culture and ultimately building on those foundations driving some disciplined growth over time. Within that, we've also acquired some businesses, and so we've been integrating those businesses. And, again, we'll give you

13:06 some updates on that as we go through the presentation today. So it's been a tough journey. Transforming businesses is not easy. It requires a lot of change. Not everybody likes change, and so we've been working on that journey. We've had to make investments. Our capital capital expenditure envelope has been high over the last couple of years. That's now coming down. But we needed to invest in the business in a number of key areas to give us that platform for growth. And most importantly as well, underpinning all of that in my mind has been getting the culture shift right in the business so that we can really bring everybody under that one FLOWTECH philosophy in how we go forward. Our 2026 strategic focus then that leads nicely into where we are at the half year, breaking that down into three areas.

13:51 That scalable integrated platform that was in place at the start of the year, we saw good momentum coming out out of of 2025. We've continued that strong momentum. Now it's about optimizing that operating leverage, and we'll talk about that a little bit more as we go forward in the presentation. But we're delighted with the revenue growth in what has continued to be some tough market conditions over the last number of years, and that has continued certainly into 2026 as well. So we do believe we're outperforming the market with a platform that's now in place. Also, a critical focus for us is deleveraging the business. We do expect through 2026 that deleveraging to continue to improve, and Russ will talk openly in terms of how we see that that will will be driven through improved EBITDA and improving the cash flow through the And then finally, the earnings accretive inorganic growth.

14:44 We acquired two businesses in 2026, which we'll come on to, but also we acquired three businesses in in the previous eighteen months. And so we've been working very hard to integrate those businesses whilst we build a pipeline for future opportunity for inorganic growth through '27, '28 and beyond. So that's the plan. It hasn't really changed. We're very focused around it. And that leads me nicely into Russ to give you an update as it relates to our financial performance in the first half of the year. Russ? Yeah. Thanks, Mark. Just wait for the slide to appear. There we go. I'm gonna come back to comments on the top line. I'm I'm gonna gonna start with a more important line of the profit and loss account. I'm gonna pick underlying EBITDA.

15:30 And everything I'm talking to on this slide really points towards our profit improvement story. In 2024, the underlying EBITDA was 5.9. 2025, it improved to 7.7, and the market expectation in the current year is 10.2. So having achieved 4.5 in the first half, that obviously points towards incremental EBITDA in the second half, which we believe is end of the achievable. So what was, five point, nine in '24 should become at least 10.2 is probably one of the key headlines to set out. So coming back to the top of the account there, the turnover, well, whichever way you look at it, we've grown, haven't we?

16:20 If you want to say in absolute terms, it's a 24% increase first half this year versus first half last year. I personally don't think that's the best headline because, of course, that takes account of the benefit of some of our inorganic activity. So on a like for like basis, the growth was 13.3%, H1 versus H1. Maybe a better stat is the 10% H1 this year relative to the second half of last year.

16:49 And within that last stats, it's pleasing to see all of our geographies growing quite nicely. I'm rounding, but those growths H1 versus H2 were 9% in Great Britain, 15% in Ireland, and 13% in Benelux. So the top line story is, I would argue, nicely positive. Gross margins, I can remember presenting so I've been closing in on eight years, but I can remember the gross profit percentage being as low as 33.8%. Rather sadly, I can remember that. I didn't even check my notes. 33.8%, I think that's probably back in 2019 or there or thereabouts. And as high as 39%.

17:36 So, actually, 37% is towards the top end of that range. And we've always said it's all about gross profit or more to the point bottom line pound notes, not any one metric. The reason for the two twenty basis point reduction in gross margin can, I think, be explained in three broad reasons? Firstly, and I'll say a little bit more about Q plus later in the presentation, But that was a was a great acquisition. It's performed particularly strongly, but its gross profit percentage is quite materially lower than the rest of the group combined. So, obviously, when you get about 8% of your revenue with a newly acquired business at lower gross profit margins, the mathematics of that has an impact, probably about sixty, seventy basis points of that two twenty as explained by the Q plus impact.

18:33 Secondly, we've chosen to be sensibly aggressive with our pricing in certain targeted growth situations, whether or not that be with strategic relationships with key suppliers or big new OEM customers or clawing back maybe some business that we lost in the past in sectors such as crushing and screening. So deliberately targeting the volume at the expense of the GP percentage, that's probably another 500 or 600 basis points. And then the third reason is it's just pretty tough out there. There's pricing inflation regularly from our key suppliers, and we feel we've dealt with that in a northern term and in quite a savvy manner.

19:23 We've been careful as to how we've increased our own prices and when. So all those things combined, point towards, you know, reduction from the 39.2% we saw last year, but still, I would I would suggest a very healthy 37%.

19:43 In terms of overheads, yeah, again, it's tough. I mean, in particular, when you think about national minimum wage, which impacts either directly or indirectly about half of our people. So 50% of our people are impacted every time a chancellor announces an increase. And, you know, pick whatever period you want, but if you go back, in over a five year period, national minimum wage has increased by 43%. If you did the same calculation over a three year period, I think it's more like 25. But very significant when two thirds roughly of our OpEx base is people costs, and 50% of those people, as I say, the demographics of our workforce is such that they are affected by national minimum wage.

20:33 So it's tough. I mean, could we have managed a position whereby the underlying increase was less than 7%? Probably. Would that have been in the best interest of the business? In our opinion, definitely not. So, you know, all in all, it's pointing towards a profit improvement piece. As I said, 5.9 becoming 7.7, market expectation of 10.2. I'm going to talk about debt on the next slide, Mark, if you could move that one, please. So as it relates to debt, I'm going to do a little bit on a look back basis, and I think more importantly, I'll do a little bit on a look forward basis. So quite a busy color coded chart there, but a couple of three things to draw out.

21:23 Firstly, whilst our EBITDA performance is improving and should continue to improve, it's not quite a bit sufficient to cover the aggregation of capital investment of lease payments and interest payments. The deficit is as low as it has been in recent years with our restructuring and CapEx numbers pleasingly reducing, but not quite covered that. The imbalance is about 1,500,000. We did raise more equity than we needed for the Q plus acquisition earlier in the year, and that's obviously proved helpful. 2,900,000 is a differential between the two blobs towards the right hand side of the chart there. But probably the the one I want to draw your attention to most is the working capital piece there. Over the the full twelve month period, we've actually generated naught 600,000 out of our working capital.

22:21 And given we've done that in a period when, like for like growth has been in excess of 13%, I think that just point to continued strong disciplines in that very important self help area of all aspects of working capital management. In fact, our our turnover in May and June this year was approximately 5,000,000 more than in May and June 2025.

22:47 So in that set of circumstances, obviously, the debtor book is materially higher or should be, but we've eked out a couple of improvements in debtor days, managed the inventory and the payables efficiently. So that management of working capital has been over recent years and will remain absolutely fundamental going forward. So on a go forward basis, I think the market expectation is we end the year with circa £11,000,000 of bank debt. Our facilities, by the way, are aggregate £25,000,000 with Barclays Bank. So we're targeting 11,000,000 there or thereabouts. How are we going to achieve that? Well, it probably points towards three key areas. Firstly, the, improved profitability.

23:34 Obviously, at some point, profit equals cash. So we should have in excess of £1,000,000 more EBITDA in the second half than the first half. Next two points are probably more important as it relates to cash, though. As it relates to our major projects, which at the moment is dominated by the two bridge contracts in Ireland, we're expecting the second half of the year to generate 2,500,000 of positive cash flow.

24:02 At the half year end, we were sat in a modest cash negative position. The second half, we're confident should be strongly cash generative. And, of course, we'll have the benefit of the natural unwind of working capital. There is no way that our debt above is gonna be anything like as high at the end of the year as it was at the end of June. You know, as much as we would like to be turning over as much in December as June, it simply isn't gonna happen. So for all of those reasons, we are confident there's some significant debt reduction in the second half of the year. Wouldn't it be great if we could end the year with our debt and our underlying EBITDA at not dissimilar numbers?

24:45 Thanks, Russ. So just on some business updates. And I noticed some questions coming in, which I was asking some questions actually around some specifics, which I think we're going to be covering some of those off here, which is helpful. So let's move on to some business updates. We've been very consistent over the last number of investor presentations around our self help growth levers, recognizing that the external market, really, since the end of twenty twenty two, is well documented. There's been there's been some some heavy headwinds, not notwithstanding that's continued this year with the conflicts some of the challenges that that's creating. So, you know, for us, you know, our belief is is that, you know, we we have to deal in the world that we're we operate within.

25:31 It's the same for everybody. And so, you know, we always are very, very clear with the team. This is very much around controlling the controllables, but also, you know, let's go out there and make our own success irrespective of what's happening in the market. These four areas, we've been very consistent in talking around, and so what we wanted to do was just to bring this to life with some good examples. Underpinning this has also been a focus around targeting some high growth industry sectors. And, again, I'll just touch on that as it relates to one one example. We are very, very focused and remain very focused on maintaining our service levels. You know, I'm really pleased to report that, certainly, over the course of '25 and and and this year, since we've completed the performance improvement plan, the service continues to be maintained.

26:16 The on time to promise has been very robust at around 99.8% around our our distribution business,

26:24 and we've had a 97% stock availability across our core ranges. And that's really important for us because the ability to be able to react. And, certainly, from a maintenance and operational point of view, the customer needs a product and they need it tomorrow, the ability to be able to ship that up to 10:00 at night, get it to a customer tomorrow is a key underpin of our business. And so, you know, whilst we're focusing very much on the growth levers here, underpinning that is still a ruthless focus in the company around customer experience, customer service, and continuously improving that. And that's been part of the culture because that's not always been the case in the past. From a an update around the the key areas, the new digital platform, we launched The UK website in August last year. It's got an undertaking building a completely new platform relatively from from scratch.

27:16 The the the the good news now is that we've got twelve months of of of measurement. We've got twelve months of reporting. We've got twelve months of data, which we we're now able to look at on a like for like basis, which is great. Delighted to report that we're now sort of seeing double digit revenue growth coming through the the new web platform. We've got active customers. Those customers that have purchased with us in the last twelve months are up by 7%. And the data points within that also in terms of average order value and average order frequency stepping up in the right direction underpinning that revenue growth number. Most importantly is attracting more new customers to FLOWTECH. I think historically, our website was operating a bit more of a as an order portal.

28:06 So we have new accounts that are opened in 2026, 41% up against the prior year. And pleasingly, 90 of those have placed an order. And that does give us an opportunity to then look at how we we can can drive more lead generation, and we can start to upsell and cross sell product ranges into those customers. And we've got some great success stories within that, some customers that have come to us who we didn't know, and they've turned out to be, you know, fantastic growth opportunities for the group, which is which is great. We've also got some other stats, the new order customers through the website, 4.5 times higher than in the prior year. And we're also generating a lot of new product distribution accounts, our trade customers. They're ultimately growing and coming to the to the new website. So for for us, this is a a really good indication of of progress.

28:55 Still early days. A website is never complete. You're continuously learning, improving. You know, we we constantly listen to customer feedback. We're having a a weekly trading update where we're making improvements all of the time based on on customer sentiment, customer feedback. So, you know, our our goal here is to continue to build what we believe to be a highly technical

29:32 It's very early days, so I'm not going to start giving you any statistics on that. We're just pleased to have the the website launched in The Republic Of Ireland, and we've got the Benelux rollout planned this month. So So that's coming on stream. So we'll have all three of our geographies on the new platform by the end of the month, which which we think is a really important milestone for us. And then finally, in the background, you know, FLOWTECH as a company has always, for forty years, provided a fantastic service to trade customers, to other distributors. In fact, the business up until 2014 was operating very much as a master distributor. And with that, the the business has always operated with a paper based catalog. There has been a demand over many years for us to be able to provide a digitized version of that catalog.

30:19 I think we've had different attempts at that. You know, we're pleased to report that we've now created a a new white label platform. We've rebranded this Feet Digital, and this is all about inspiring industry towards a digital future. There are hundreds, if not thousands, of distributors and resellers in the world of FLUIDPOWER and providing them with with a digitized approach, provided them with a a fantastic web platform backed up by a white label three PL logistics service, also access to over 30,000,000 of inventory. And all of that availability and service that we we talked talked about, we think, is a fantastic opportunity for for us to support the market but also to enhance growth.

31:01 It's early days. We wanted to make sure that that we've launched this in the right way, in a steady and careful way, bringing our existing customers on the journey first, migrating them. We've now got an ongoing pipeline month on month. We've got eight new customer adoptions going live as we speak, and we've got a long pipeline of opportunity as we look forward. And this is a program that would not just look to roll out within The UK market, but over time, we'd look to adopt this approach into the European market, helping other distributors who perhaps struggle

31:30 to to go on that digital journey. And we feel that that's a key part of our growth strategy as we go forward as well. So lots of progress in this area. But as I said, it's a key focus for us, and we see this as being a big growth a part of our growth levers as we go forward. The other area I just wanted to touch on was products and service expansion, enhancing our capabilities and partnerships and accelerating our growth. Just a reminder, we have a very important product offering, which is Feet Pro. This is our own brand, our own range of products that's been in the market now for for over thirty years. It's a key growth and and margin contributor for the business. We now have annual revenues of circa 20,000,000 in Feet Pro, and the range is now more than 17,500 stop lines.

32:21 An overall partner of range of over 63,000. So this is quite an extensive range of products. We did rebrand two years ago, 11 different brands all under the Feet Pro brand. And our goal now is look to look to see, a, how do we improve the marketing of the Feet Pro range for our web platform and making that more readily available to the wider market? How do we roll that the the the Feet Pro range out into our other markets outside of The UK? How How do do we we also also increase through product range expansion over '26 and into '27 and beyond? And we've now got some new ranges which are coming on stream, which we we believe will give us some positive upside as well. So So this is a really important focus area. We're making progress. For me, I think what's been lacking has been the ability to really push the brand through the web platform, and we've now got that capability in earnest.

33:12 And so that's something that we're going to be putting more focus around as we go forward.

33:17 We've also as we've discussed previously, we've developed some very strong strategic supply partnerships. One of those, which actually was strengthened through the acquisition of FLOWTECH at the end of twenty twenty four, was a appointment by SMC, a global leading pneumatics and automation company, and they they awarded us their first UK wholesale distributor agreement in the middle of twenty twenty five. So that's been a program where we've been consolidating their customers through the FLOWTECH trade partner platform, helping them to consolidate their long tail of direct customers and their their goal being to move more of their direct business through distribution. We've got now over 230 customers that have migrated to the FLOWTECH platform, and that's on a a run rate of around 1,500,000 of incremental annualized revenue, and there's plenty more opportunity there that we're working on with with SMC.

34:11 And we've got a new program with another global flow power motion control supplier, which we're commencing in half two this year, and that's very much a similar program to consolidate and develop a a program into our distribution network. And we believe that that opportunity, similar to SMC, is worth in excess of 2,000,000 of growth to to the group. So these are the examples of opportunities working with some of the brands that you can see at the bottom here. These are global, you know, book multibillion businesses utilizing FLOWTECH and seeing the opportunity for our platform to help them to grow and to help us to grow together. Another area that I I called out was that focus on targeted high growth industry verticals. We mentioned areas such as defense. We infrastructure, which I'll touch on in a minute. We talked about data centers. We've talked about transportation.

35:03 And, actually, when we when we get on and talk a bit more around areas such as HELI PEBS, which is the acquisition that we did in in in June, this is also giving us access into some new and developing sectors such as oil and gas, subsea, marine, and nuclear, which are exciting segments for us. But just on data centers, we embarked on a on a program of work about twenty one twenty four months ago. And the starting point was looking to see what do we have across the group in terms of our product offering. Bearing in mind, I mentioned that we were operating as as lots of different fragmented businesses. How do we bring all that together to provide a a value proposition and a value stream for data centers as the new data centers are being built. The diagram at the bottom here, I won't go through it in any detail, just talks around the different areas where our products and service assortment very much support and adds value to the building of data centers and also the maintenance and operation of data centers as well. We've been building very strong relationships across the Irish market and also across The UK market specifically, developing our understanding, developing our reputation, but also developing our capabilities.

36:13 We've exhibited at data center world in Ireland and and at Excel in London earlier in the year, raising the awareness and the profile of our product offering and our service offering in this space. I'm delighted to say that on the back of that, the the revenue is growing at about a 128% year on year. And more importantly, actually, because this is a longer term play as we know in terms of the the ongoing planning and building of these particular facilities, the order book and the pending orders is now in excess of 2,000,000. So we're quite excited about this opportunity, but it's just one example of many where by putting focus on a specific vertical segment, you know, we're starting to see some early signs of success. And the case study on the right hand side here is a natural project that we've completed at a new data center in South Wales, something we're very proud of. So it just gives you an idea of the size and scale of some of the work that we're doing in this particular space.

37:09 Then as I mentioned infrastructure, engineering project is an area that where we're gaining very good momentum, and I think we're building a good reputation. We announced previously that we won two large infrastructure projects in in Ireland, one which is the Narrow Water Bridge connecting Northern Ireland to Southern Ireland, and the other, the Edmund Rice rehabilitation project in Waterford in The Republic Of Ireland. These two bridge projects combined about €9,000,000 of of revenue and that being spanning across '25, '26, and the Narrow Water Bridge also into 2027. Pleased to report that those projects are progressing very, very well. The Edmund Rice Bridge is expected to be completed in q four twenty twenty six.

37:56 The Narrow Water Bridge project is on track. The expected contribution for half two twenty twenty six is is certainly in line with with expectation, and that project is set to continue into 2027. There was a little bit of of shift in the project time schedules from the first half into the second half, So there's a bit more half to waiting than originally expected, but we do believe in the full year that the bridge projects will deliver what we had had effectively planned for during the course of 2026. And just a word on these projects. The the group continues to develop its its infrastructure and its capabilities in supporting these types of projects. We've been building out the pipeline of larger turnkey MICA projects. MICA is the phrase for mechanical, electrical instrumentation, control, and automation projects.

38:45 And we're seeing an increase in the number of opportunities and the number of tenders. And, typically, these are in areas such as flood defenses, bridges, locks, ports, harbors, and other large scale infrastructure where there is movement. We've got five live opportunities, which, you know, we're currently in in bid processes for. They represent more than 20,000,000 of potential contract value over a three year period, I would say. And I guess it's just worth noting that these major projects have a longer bid cycle. They do typically span over multiyear contracts. There is an opportunity in a number of instances for longer term maintenance post completion, so they do create reoccurring revenue streams going forward. We believe that the revenue profit in cash related to these projects is very forecastable, but it's variable based on the project milestones by contract. And that's something that we just need to be mindful of as we we go go forward. Forward. But it's certainly an area of focus, and it's an area where we're we're gaining experience and expertise as we go forward.

39:47 And, Russ, do want to just then pick up on inorganic opportunities? Yeah. Just before I I do do so, maybe just to build a little bit on the engineering project side, and I just noticed a question that's coming around not only our profit improvement journey, but how do we get to our double digit and ideally mid teens EBITDA position. And engineering projects is a fundamental part of the organic growth. Clearly, to get to where we want to get to, it will be a blend of organic and inorganic. But as it relates to organic, there is so much opportunity in this space. I'd be amazed if the turnover doesn't increase year on year on year in this part of our business. I don't think there's a risk that we enjoy the benefits of the Irish bridge contracts and then get a fallow period.

40:40 And we expect the work to be plentiful, and we expect to do it well. And therefore, we expect the bottom line margins that fall off of it to be particularly strong. So the growth, know, today, it's about a 7,000,000 revenue stream. But tomorrow, whenever tomorrow is, it's not that far away. We're targeting materially more revenue and materially more profit from this really, really important area. And by the way, it might look on occasions quite complicated, but when you when it boils down to it, there's a lot of what I would call as a northerner, a lot of bread and butter stuff that goes on in these things. It's not overly complicated. We're not stretching capabilities, and we've also invested quite significantly in the quality of our team to perform this work in recent bit.

41:29 So, yeah, Mike, if you can If if I may, just just whilst we're on the questions, I just noticed that, you know, the question around what differentiates us in this area. I'd say scale differentiates us. You know, we don't just have the ability to provide, you know, the design consultancy on these projects, you know, or the project management of these projects. We also have in house manufacturing capability, either either in house ourselves or working in conjunction with our strategic supply partners. So our ability to provide a complete turnkey solution actually allows the projects to collapse down the complexity of the number of partners that they need to work with, and it puts us in a very, very strong position. And I think that's a unique differentiator. For us, as much as we can build in house, we will. So so these types of projects do feed our engineering services and solutions centers, which is which is important, and all of that helps with the operational gearing as we go forward. That's important for us. And there was just a question about the the Belfast Harbour project, which I guess, you know, would sit one underneath an engineering project for sure.

42:33 And this was just linked to, you know, what's happening as it relates to The Netherlands. You know, we're we're excited to be in The Benelux. Actually, I was out there just the other week, you know, meeting with the team and and going and meeting with a number of customers out there. I think what's exciting is is that, clearly, you know, the the same is true. There's a significant amount of opportunity within the ports, but also the majority of the of the The Benelux markets are below sea level. And there is a significant amount of infrastructure upgrading that's needed, and that's a market for us which is, you know, very interesting. And so building our capabilities there to be able to do similar scale projects is is a key objective for us as well, just to pick that question off. K? Thanks, Brian. No problem. So this slide here is becoming quite a familiar one. It's got an extra extra column on it almost with Helipeps now. But just to remind you that in the last two years, we have done five acquisitions.

43:33 FLOWTECH was out of administration, Ballswage was out of liquidation, Thomas was in distress, and had announced a wind down of activities. So for some suffice it to to say we paid very little for those four, individually and collectively, And that, is proven by the fact that FLOWREI had 2,200,000 of negative goodwill attached to it. I we got a lot more than we paid for. And HELIIPEDS, as those of you who read this morning's announcement, 1,600,000 of negative goodwill. Consideration was only £400,000 for Alipeds and we got quite a lot in return. Q plus was a beautifully profitable business that we acquired earlier this year. Delighted to say that that is performing particularly well.

44:22 And in its forty year history, it had its all its best ever month in the month of March, And lo and behold, it beat it in the month of June. So we're delighted with its performance, its contribution in the first four and a half months of ownership, and we look forward to a strong contribution from it in a full six month period in the second half. But if you add up all the turnover we acquired there, it's in the region of 30,000,000 sterling. And aside from Q plus those businesses were either loss making or certainly not profitable. We did pay £6,000,000 sterling for Q plus That will become 7 when some deferred consideration gets paid. But all in all, we acquired 30,000,000 of turnover, and only Q plus was profitable.

45:16 So we're obviously pretty pleased that we can make that statement at the bottom of this page that as we exit this year or enter next year, we should be delivering 35,000,000 to £40,000,000 of top line and in excess of GBP 3,000,000 of EBITDA. So we think that will be a nice build on the profit improvement story and a nice segue into a good 2027. So I said a little bit there about Q plus I'm not only delighted with the numbers that it's producing, we're delighted with the manner in which the people within that business have really, really embraced being part of the FLOWTECH family. There's a real happy feeling, a bit of a real buzz about the place. I was with Mike a couple of weeks ago and went out to the Benelux. It was great to see.

46:08 As it relates to Helipeps, know, similarly, I mean, that was it made FOURITE look young. FLOWREIT, when we bought it, was a 174 years old. HELI PEPS was a 188 years old. As I said, it it had announced its wind down of activities, much to the disappointment of some of its customers. And fairly obviously, it's taken a few months to get it back up and properly running. But it's received, in the region of £2,500,000 new orders, which sets it up beautifully for the second half of this year, particularly the last four months of this year and into 2027. And the business has brought opportunities which we didn't previously have into new sectors such as subsea and areas of defense and oil and gas.

46:58 So there's lots of sort of cross group synergy play attached to it as well. So, yeah, having, you know, not paid a lot for that with all that negative goodwill, there's a feel good factor about that one, and it should be nicely profitable in the balance of this year, and I would hope beautifully profitable into '27 and beyond. Yeah. And there was a question being asked in terms of consolidation of locations. I mean, clearly, those types of areas are continuously under review. We are looking at how we scale up in the Gloucester area. We now have two businesses which are in close proximity to one another. What we want to do is we want to continue to grow our capability as an organization, but also operate for less. So there's a great opportunity, of course, to look to see how we can create greater engineering muscle and a real center of excellence, if you like, within that geography, which is something which we're looking at as we go forward. And the teams are aware of that, and everybody is very excited about it as well. So just wanted to pick that question off. So I think overall, in summary, we continue to look at inorganic opportunities, not at expense of organic.

48:10 We're pleased to see, as we said in the like for like growth numbers, that we've got good momentum. And interestingly, we're now seeing more and more inquiries coming from the organic business into the acquisitions and vice versa, opportunities being opened up by the acquisitions businesses for the core business. And that ultimately starts to create that more of a snowball effect, that flywheel effect for growth, which is something that we've been encouraging under the one FLOWTECH philosophy within the business. Just then, I guess, summarizing a bit around momentum into half two because to Russ' point, we are looking at having a stronger second half of the year than first half of the year. We achieved that last year, and we see that as being a similar weighting this year.

48:55 The the performance is trending positively across all three regions and also across the different sales channels of product distribution, but also the services side of our business, but also major projects. And the graphical representation on the right hand side are purely just indicators for you. But the group order book is currently at the highest level since the beginning of 2025. You know, if I had the the the remaining of the bridge projects and and a few other elements to that, it's fair to say that, you know, we've got incredibly good momentum there with the with the order book. Underpinning that as well, the sales pipeline is incredibly strong. And and, arguably, I think the sales pipeline is as strong now as it's ever been. So we've got plenty of demand and plenty of opportunity across the group, which we're pleased about. We have to be selective. You know, we we want good business, and we have to make sure that we continue to, you know, keep our teams focusing on quality rather than quantity. It's a balance.

49:49 We we have seen the highest levels of sales per working day in our product distribution business since the beginning of 2025, and I think that's encouraging for us. You know, we we if we look at the the orders in, which is the orange line on the middle graph versus the invoice sales, we're actually seeing the orders in out outflanking the invoice sales, which is good. That means demand is strong. You know, for for us, that's also customers have started to have that confidence to place orders ahead of time, you know, more scheduled orders as well. So, you know, we we feel we're winning loyalty there. You know, we have talked about the gross profit delivery. You know, we we're we're working very hard on the gross profit delivery. We are working very hard on managing the inflationary pressures. You know, it's not easy out there in the marketplace. There's there's a lot of price inflation coming through from suppliers. There's a lot of cost price inflation coming through. At the same time, you know, we wanna remain market competitive.

50:45 And so, you know, for us, we need to help our customers to be competitive, and we've got to find the balance there. You know? So we are taking the right choices, I believe, in order to try and mitigate against price increase whilst also remaining competitive to win to win volume. In the end, as Bruce has said, it's about growing gross profit ultimately. The demand is strengthening across the the business, and we're we're seeing this year against last year a better momentum building in as we go into the second half of the year than we had this time last year as well. And we feel that that's an encouraging set of trends, which we believe will will carry us well into the second half. And so moving on to outlook, the current trading is certainly in line with four year market expectations. You know, we we do believe that the market isn't gonna be our friend anytime soon.

51:34 I think we've just accepted that this is the new norm, and so we we need to make sure that we can operate within this and continue to grow within this as the new norm. You know, we want to make sure that we continue to manage our gross margins as effectively as we can, as Russ has described, and we are doubling down always on our cost base. You know, we we do have you know, to to Russ' point, you know, we do have areas of our business where we need people. We need good people. You know, if I just look at hydraulic engineers in the market, you know, they're becoming scarce. You know, we need to work really hard to bring the right quality of engineers in, you know, and the cost of those engineers continues to increase. So we've got some dynamics here that we've gotta work to, but that starts with growth. If we've got the growth coming through and the growth momentum coming through, then we can then start driving the mix within that. If we just look at the summary around the the second half of the year now, we've got the strength of the sales pipeline and the order book. We believe that we've got the four strategic sales growth levers that we've just worked through starting to fire up well. We're starting to make some good progress there.

52:38 We've got the weighting of the two bids projects in half two. We've got continued traction from the group's digital investment program, and we'll continue to see great momentum building there, which is encouraging. We have the integration performance of the recent acquisitions, and that certainly is ahead of plan. You know, we're we're also carrying a bit of a lag. If we take Helipeps, you know, the the gestation gestation period on orders there is three to six months and beyond. So, you know, we need to make sure that we can actually start to get get some of those new orders in, start building, and then we can ultimately start billing, but that'll happen later in the year. So we're carrying some costs there for a period of time. We've got an expected improvement in half two gross margin, part mix, part through self help interventions, we believe that the cash flow profile both in terms of major projects, but also the natural reduction in working capital year end will also support improved cash generation in the second half of the year.

53:33 So that brings us to the end of the the presentation. I'll just come out and look to see what other questions that we've got, And then we can we can work through some of those, Russ, as we go forward. Yeah. Perhaps I'll just pick off one more while you have an opportunity to cash around down there. There's one I'll I'll praising it, but, with inflation at the moment, should we be stocking up, for distribution later, or is that not a wise thing to do? I mean, in some ways, it would be nice to capitalize on that. But for me, I think I'm fully respecting the need to deleverage and, you know, managing inventory has been at the heart of what we've one of the things we've been at the heart of what we've been doing in recent years.

54:22 We've managed inventory and kept availability at a really, really high level. I remember within our Skelmersdale location, I think we took and it's a little bit dated now. A couple of years ago, we took one and a half million, I think, out of the inventory, but at at at the same time, improved availability from 85% to 97%. So I think if we didn't have anything better to do with our pound notes, then, yeah, I think that would be a good idea, but I think we've got a lot of better things to do with our pound notes in terms of managing debt reduction. So on balance, I'd say, to the question David raised, not now, but not never. Okay. Just a question around the Benelux website. It was originally planned for q two. What was the delay?

55:09 I think quite simply, we acquired q plus and we wanted the team 100% focused on successful integration of q plus We decided to hold fire on the work needed to route in the new web platform. And, actually, there was some development work happening in The UK introducing some marketing AI tools into The UK website. And the two things combined, we thought it was better just to wait so that when we went live, we had we were a bit further along both with the website, but also we'd had the opportunity to better understand Qplus at that point in time. And those are the main reasons on that front. I think we've answered a lot of the other questions looking through here, Russ, as we've been going through it. We certainly touched on those. Right? Yeah. I think we've I think we've answered everything that's been given to us here.

56:03 That's great. And thank you for addressing those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Mike, could I please just ask you for a few closing comments? Yeah. Once again, I'd like to thank everybody for your time. Yeah. We're on a journey here. I believe that we we we entered 2026 in a far stronger place after completing a two year transformation and integration journey of FLOWTECH. It's not been without its challenges. All these these things are never easy to do, but I feel that we've got a fantastic team. You know, we've got the bit between our teeth now in terms of really taking our full offering to market.

56:49 And most importantly, you know, what I'm pleased to see is that we've got that flywheel of growth really starting to move. And so, you know, as I look ahead, I'm very optimistic irrespective of difficult market conditions. We have a very strong order book, a strong sales pipeline, and this is a very fragmented market, which is ripe for consolidation. We have size and scale in a market where most of our competitors are much smaller than us, and I I feel that that gives us an advantage now to really start to accelerate the growth of this organization, both organically and inorganically, for the future. So appreciate your support, and we look forward to updating you again once we get to the full year results. That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

57:39 This may only take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.