Flowtech Fluidpower 2014 Annual Report
The Group has been able to continue its growth trend, with a resilience based around the wide and varied customer base which in turn services an extensive range of industrial sectors.
We have demonstrated that we can deliver profitable, as well as consistent levels of service to our diverse customer base. There is also significant opportunity for us to achieve organic growth through product development and international expansion and enhancing this through acquiring businesses that have high quality management and staff who can work with us to deliver our corporate strategy.
We continue to see this strategy as paramount for all stakeholders and we have started to successfully deliver on this philosophy. Primary is the first step in our strategic development to deliver our objective of expanding our reliable, customer focused, broad-based fluid power group. This business has a strong brand and commanding position in its marketplace. The initial integration process has been extremely smooth and whilst some synergies will be generated within the Group, we continue to retain the way the Primary and Flowtechnology portfolio models currently operate — highly focused, commercially independent operations delivering quality customer service at all times.
The acquisition has already added significant value to the Group’s brand portfolio by strengthening our offering in hydraulics. It has also been a great opportunity to extend our in-house knowledge and expertise and not least, the additional strengthening of our leading position in the industry.
The British Fluid Power Association ("BFPA") has estimated that underlying demand for hydraulic and pneumatic fluid power products in the UK was £954 million in 2014 and this same forecast, which was released last October, suggests that between 2015 and 2018 the market is set to continue to grow at an annual rate of 4%.
The Group's markets generally have an exposure to the performance of a wide range of industrial segments. It is expected that the recent negative impacts widely seen within the oil and gas industry, as a result of substantial oil price reductions, as well as those markets with significant exports to the Eurozone, will have some detrimental impact on the growth performance of the industry in the early part of 2015. In particular, the Primary operation has some direct exposure to both these markets and action has been taken to alleviate the impact by transferring its focus to alternative sectors. However, the Board also expects that the robust outlook predicted by the BFPA, when coupled with the business strategy being implemented, will in the medium to long term allow the Group to continue to improve results and cash flow within all our operating sectors.
Whilst cost control will be paramount, at the same time the Group will seek to ensure that it is able to exploit any upturn in these markets when this arises and will continue to invest as appropriate in the necessary resources to support its growth strategy. For example, in March 2015 the Flowtechnology UK business launched its new catalogue with a distributor convention for over 100 decision makers in its largest customers and which was for the first time held overseas. Whilst the cost of event was underwritten by the Group, the feedback from customers has been excellent and is expected to be the first in a bi-annual series that reinforces the partnerships between ourselves and our key distributors.
Finally, the key to our Group's success is our people, and we would like to also thank all our colleagues and staff around the globe for their hard work, dedication and commitment, all of which has helped us to deliver a very creditable and solid performance in our first year as a plc; 2014 marked a year of significant change for the businesses and opened up our commercial opportunities immeasurably. As a team, we look forward to continuing to share with everyone, our future success over many years to come.
The Strategic Report has been approved by the Board.
On behalf of the Board
Chief Executive Officer
14 April 2015
Key to our Company's success is our people, and we would like to also thank all our colleagues and staff around the globe for their hard work, dedication and commitment, all of which has helped us to deliver a very creditable and solid performance in our first year as a plc
Officers and Professional Advisers