Flowtech Fluidpower plc (FLO) Earnings Call Transcript & Summary

Good morning, and welcome to the Flowtech Fluidpower Plc Annual Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Russell Cash, CFO; and Bryce Brooks, CEO. Good morning to you both.

Yes, good morning. Good morning to everybody joining us this morning for our full year 2021 annual results presentation. We're going to follow the basic format that we've used for the past 2 IMC presentations where an initial period of time we'll discuss the hard numbers that we produced for last year, and then we'll move on to a section on our overall strategy and the development, of which there's been quite a great deal occurring during the course of the last 6 to 12 months. In terms of -- initially, though, we'd just like to reiterate some of the fundamentals as to why from an investment perspective, we've got several positive aspects to where we sit today. You'll hear a lot today, though, particularly about our organic growth potential, investing significantly in e-business and the commercial reorganization of the group in order to create the correct platform for growth. We'll touch a little bit on the fact that our leadership team has been significantly expanded and recently enhanced with 2 appointments of nonexecutive director level. And overall, confirm the fact that the capital structure that the group has and capacity within our banking facilities has allowed us to react to the difficulty that our marketplaces have with supply in a way that's helped us positively grow the business over the past 12 months. Okay, Russell, over to you in terms of the financial review.

Yes. Good morning, everybody. I hope everybody is well. Myself and Bryce are sat on the same side of the same table in some nice offices in London that will remain 2.01 meters apart. We obviously remain in a highly uncertain world where actors come up from a stage and punch the presenters. So in that uncertain world, we think we've done a reasonably good job.

We turn the camera off a lot.

So I've only got 4 slides. But the short version of the short presentation for me is that we've effectively done what we said we would do. We're beginning to see some encouraging trends, and we're very much looking forward to what 2022 and beyond will deliver for us and our investors. You'll hear more from Bryce, rather, myself in terms of things such as the 5-to-1 project, which is done, and early signs are very encouraging. And on the business investment we've made, where there's still stuff to be done. But in terms of the numbers, the headlines. I'll touch on each of these points. In terms of revenue, yes, it's up 15% against the difficult 2020 year, but clearly, a more meaningful comparison if we're going today a normal world year of 2019. So we are 3% down. To be fair to ourselves, we did signpost 2021 as a year in which we'll be recovering rather than fully recovered. And that's exactly what happened. On average, 2021, we were recovering, but the trends, as I'll go on to show in a later slide, were progressive. And broadly speaking, right here, right now, we are fully recovered in terms of our revenue streams. Bryce will touch on a little bit a segment-by-segment commentary. But broadly speaking, we were recovering but we're now recovered. In terms of gross margin percentage, no apologies, I tend to say the same thing year-on-year. This is my fourth year doing this. And our margin remains consistent and strong. And we're just not in the business of sacrificing basis points with margin in the pursuit of revenue. So I think I always say we will pat ourselves in the back too strongly. It sits at 35 point something, but we wouldn't beat ourselves up too badly it was 33.8%. I think, is the lowest percentage I can remember. But consistent and strong, and we won't do anything other than maintain our focus in that area. In terms of overheads, there has been a modest increase in operating overheads. If you take them in total, GBP 0.4 million or 9% in distribution expenses. But I think in the world of inflationary pressures and 15% revenue increase, people will view that as a decent number. And the balance of our overheads, we've mitigated the impact of inflationary pressures and costs that we necessarily had to put into our supply chain and logistics functions. There's a linkage of that to the build in inventory, which I'll cover a little bit later. But we've mitigated that through the full year effect of prior period restructuring activity that we've obviously messaged in previous presentations, such as this. So we feel our overheads have been controlled pretty well. As I said, Bryce will comment on the segment-by-segment piece in terms of the profit per segment. In terms of debt, again, I think we signposted this. 2019 and 2020, just to remind you, we took just north of GBP 10 million out of our debt position on a like-for-like basis. Rounding the numbers, it went from GBP 20 million to GBP 10 million. So we felt we've earn the right, really, to invest -- or put some more debt back in the balance sheet to invest in inventory in the year in which it was most needed, I would suggest, in 2021. So that's essentially without -- there's a debt bridge coming up in a second. But essentially, our cash profit has not been sufficient to fund what we view as a very sensible build in inventory that's actually put us in a pretty good spot right here right now. Beyond 2021, we do see a return to a debt reduction mindset. We have reintroduced the dividend at a much more modest level. People who have followed us for a while will remember it did get up to north of 6p per share. We felt, on balance, it was important to reinstate the dividend, but it's not at the top of the list of our priorities as one of my other slides will refer to in a short while. This is the debt bridge. So there's the standout bar is the big red bar, which is the inventory build, GBP 8.5 million. Again, to remind people, we took GBP 9 million of inventory in 2019 and '20. So it's not as if we've gone back up to levels we've never seen before. But it is fair to say that over time, our inventory position, which currently stands at circa GBP 30 million should be on a downward trend. But I do stress over time, people shouldn't expect much, if any, of that certainly in the first half of this year given the uncertainties beyond actors punching presenters. There are obviously joking apart, lots of uncertainties that we need to recognize and be respectful to. There's a nice big green blob there in terms of our cash profit. Looking forward, of course, we expect that green blob to get materially bigger. And 2022, I would expect there'll be a modest movement in working capital. I can't tell you which direction it's going to be and to be honest, because clearly, as our revenues hopefully increase beyond the current position, [indiscernible]. And all things being equal, there should be a modest reduction in inventory in 2022. So I don't expect the working capital bar to be a big one next year, but we do expect the green bar to be trending in the right direction, obviously. The other thing I'd mentioned there is within our capital expenditure there, that figure of GBP 1.6 million, there's about GBP 600,000, GBP 700,000 of, if you like, exceptional project-related spend. Our steady-state number is circa GBP 1 million. So I should mention we did repay that GBP 0.9 million of HMRC COVID-related debt that was outstanding at the beginning of the year. So certain almost GBP 10 million of headroom within our GBP 25 million aggregate banking facilities even after investing sensibly and heavily in our inventory build. I'm not going to say too much on this. I mean the dividend, I've already mentioned. On balance, we felt it was important to reinstate it. But it's at the bottom of that right-hand box for a reason. For us, it's all about organic profit growth, and we'll use our cash to invest whether or not that investment be in project, and Bryce will further, 5-to-1 in the e-business in more detail later, or as we've recently seen in inventory build. But we respect the dividend piece, but it will sort of fall off the bottom after investment spend. My final slide, colorful one. Quite proud of myself, I produced that all on my own, actually. But it does demonstrate the path to recovery. This is revenue per trading day. And Q2 2020, to remind you, we were 4-1, 41% down like-for-like when the pandemic first hit. And there's obviously been a nice road to recovery there. I've just highlighted Q4 2021 versus Q4 2019, and it is pleasing to say we left 2021 with revenue per trading day in that final quarter, being reasonably significantly in excess of Q4 of our last normal year. So when I said it early on in my introductory comments that there are some encouraging trends, the full recovery of our revenue is pleasing. And again, we've not sacrificed our margins in doing that. And whilst Q1 2022 isn't on this slide, we are encouraged by the start that we've made, as I said, in margin as well as revenue. That's all I really wanted to cover. Over to Bryce to touch on the segment performance before we get into more of the areas of strategy.

Thanks, Russell. Clearly, we set out at the start of this year to ensure that each of our respective segments improved on the 2020 performance. Some of that would naturally happen out of the recovery from COVID. But in each of these areas, we're pretty pleased overall with the results, with the possible exception of the Services division that didn't make as much progress as we would have liked. And in the main, the Flowtech division is the one that soaked up much of the inventory build. That's an MRO for a focused organization, in essence, you need the stock on the shelf. And this year was characterized by initially not having a great picture as to where the year would work out. February to May, and it looked as quite a significant growth period when it was well ahead of the stock holding that we had as we exited the 2020 year. And when you come to buy the stock, you end up with issues overall of supply chain, whether it be Far East, whether it be getting the containers, whether it be out of Europe, where you have continued shutdowns. And therefore, we took the decision, in order to ensure we retain the service levels to our customer base, we had to increase book with stock significantly, and that has been done over the course of the year. We started in the Q1 where our category A stocks, in essence, our top 2,000 selling lines in certain weeks of the year was 16% out of stock. We've never seen that before. But by the end of the year, we'd return it back down to about 4% on a day-to-day basis, which is where it's historically sat before we entered 2022 in that position. And that's been reflected in our early trading, which is certainly very encouraging. Overall, our target there in the short term is a move to a 15% return on sales, and we believe that well above that is achievable in the medium to longer term, particularly when our e-business strategy starts to get some traction. Solutions is much more heavily focused around supplying directly into OEMs. There was an MRO element to what it does, but a heavy content is directly into OEMs who are supplying typically our hydraulic component, typically a specified product as opposed to a generic product. So it might be a particular brand, a part of a structure, et cetera, and therefore, if that isn't immediately available, then you can't fulfill the order book. So again, similar characteristics, but no concept there of a replacement product being readily available, and it's had to work within that particular framework. So it took a lot longer to get going during the course of the year, and again, had to restock itself, build larger buffer and enter 2022 in a good position. And again, we've seen that pull through into the early part of the year. Services. We thought we'd be significantly further forward. Our order book gave us some encouragement that, that would be the case. But in the second half of the year, the performance was a little patchy. There, if you can't get hold of a particular component, you can't make the GBP 30,000 power pack and, therefore, fill the order book. So we have quite considerable overhang into 2022, underperformed against expectations in 2021. But again, we're quite confident that this year will bring about a resolution to sort of minimum 5% return that we're targeting there. And obviously, our aspiration is much higher than that in the sort of medium term. As Russell talked about, a lot of the cost base restructuring work, typically of warehousing facilities and warehouse employees that we did in 2020 and 2021 under the COVID period has helped us protect against some of the inflationary pressures that are pulling through. And as we get into 2022, everything will be characterized by that. Quite strong pressures in both the product set itself and our ability to pass through those prices, and equally strong pricing pressures in people, utilities, properties at our underlying sort of cost base. We're pretty confident that the work we've done to date is drawing fruits on that and protecting us against the market pressures that are coming against us. So overall, we feel that each reporting segment, we've got good growth potential underpinning our aspirations for the 2022 and 2023 financial year. And behind that, we've got a service center cost base that is now mature and expanded. And we'll talk about the results now that we've got it within the Management Board level. So overall, in each reporting segment, good, positive growth in all aspects. Okay. I'm going to talk now about some of the fundamental growth strategy elements. We defined this in late 2020. Presented it in April 2021 a year ago this week, and reiterated some of the progress made in our September 2021 presentations. Overall, what's our target with this? Well, it's to ensure that we are an all routes-to-market business, completely integrated, both internally and in our approach to external markets. In its broader sense, we have a historic legacy off-line focused business in what is the Flowtech branding segment and the Fluidpower Group branding segment. One largely focused on MRO, the other one largely focused on OEM. Albeit there's some interchangeability between the 2 various legacy operations that we've got. But then linked into the one web presence has always been our target. So flowtech.co.uk., all of that feeding off the single product file, therefore, allowing the group to use all our resources to attack all the markets available to us, both off-line and online through our SEO activities, a lot of which are done during the course of the year to transition our business to maximize our opportunities and our potential. But the first big achievement was the creation of the Flowtech brand by combining all the previous legacy profit centers. These all acted independently. Yes, under a new umbrella, there were certainly sharing of resources from product set, IT, commercial, but nothing like as integrated as needs to be to set the business up for the near term. And this is now an all routes-to-market operation for the very first time. It's quite important that investors understand this because the initial conclusion may be, well, you can sell to everybody. Historically, these businesses have been a master distributor through a distributor format and, therefore, restricted effectively its access to the marketplace. In 2021, the creation of a single brand with all routes-to-market style is a major move forward troubles. Very pleased to say that was by far the biggest project that we've undertaken. We've got over 250 employees across these particular legacy businesses in 2 countries. We have to combine IT systems, combine pricing files, coordinate marketing, crucially to aggregate ourselves under a single catalog with a master catalog. And for the first time, 4 subsidiary catalogs, which mirrored the marketplace in which we operate. And therefore, we set up specialists into pneumatics hydraulics process and instrumentation and industrial. So a major, major step forward for us and very successfully operated by the effectively new project management skill sets we've invested in over the past 12 months. And in fact, if investors wish to look at a wider sense about what happened during the 5-to-1 project that implemented on the fourth of Jan, they can look in the video library on our corporate website. So a major move forward for us. I will now move through into 2022 when the sister element of that, the creation of the single Fluidpower Group branding style will bring together all our other brands. Brand consolidation of those legacies that you can see on the screen all focus around the hydraulics market, initially but it will give us the concept overall to provide similar services into the pneumatics market, which is a smaller market but not insubstantial. The commercial integration that we'll create will mirror the supplier strategy as well as the market overall, with a clear split between mobile applications and industrial applications. But crucially, they'll all feed off the Flowtech logistics hubs that are now being created and be able to create productivity gains by the use of the single trading website. This will have a focus around building a mirror of the market, as I say, component distribution, fluid conveys, [indiscernible] overall, the 2 segments that are critically important to this marketplace, hydraulic power units and, equally, on-site services. So a major focus of 2022 will be the creation of the Fluidpower Group brand. In parallel, we've created the new flowtech.co.uk. website. We flagged that we're expecting this to be live in Q4 and then we hoped in Q1. The testing process has been rigorous and hasn't gone exactly as we would like in terms of time to scale. But we're now in final build and are very encouraged that this will go live shortly for us and be transformational in terms of what it can achieve. In two particular areas that we have much more modern customer experience and transition from the previous order portal structure that we had. But just as importantly as that customer experience will be the analytics capability that this will now bring and completely complement our off-line strengths in our marketplace as the largest provider of what we do. And at its core is the product set. We'll effectively go from an analog process to the full digital age of what's called the PIM, consolidate the products right across the group, rather than being just in the focus of the individual entities that we've got. We'll be able to extend our portfolio, already from 50,000 SKUs to 125,000 SKUs. We'll go live when the overall process comes to fruition in the near future. And crucially, it will be able to integrate with our major manufacturers. Again, if potential investors and investors wish to look at the sort of look and feel of the new website, there's a video link that they can follow as shown on the screen there. So I talked about the digital insight that we're going to get and the capabilities, but why are we doing this? Well, in essence, it allow us to hopefully sell more. We've got a very strong customer set. And when we started this journey, we knew that we had about 17,000 customer records from the way that we can manually put this together. But what's interesting, out of the first run of the CDP, we overall got 47,000 customer records in total that Flowtech has acquired in its data pool over the last 10 years. And to some degree, we got access to a further 120,000 records through all these sort of means. So the actual ability to digitize what we're doing using the capabilities that have come out from these new skill sets is enormous in terms of attacking the overall business unit universe that we've got available to ourselves. Upsell, cross-sell, retain, acquire, all the usual aspects of a fully fledged marketing brief is what will be available to us, and we'll be able to exploit that over the coming years and months and years. The level of sophistication, the ability to identify combinations, patents within particular comparable suppliers, integrate this with e-mail marketing campaigns, driven by artificial intelligence through all the means that we've got is really very exciting to us in terms of its potential. And behind that, this all routes-to-market web offering will use search engine optimization for the very first time. To reiterate, originally, our web presence was always as a mass distributor-to-distributor structure, but now, we'll be able to look at this all routes-to-market. We've stepped up our key search terms. We originally identified 200 terms. We went to the next level of that. We're up to 600 terms. And when we get the Google Analytics assessment of our marketplace, yes, there are leading players there, RS Components being the standout. Flowtech is significantly down that list, and our plan is to drive us up in terms of the presence overall, and again, with the view that, that will allow us to increase sales and grow organically through the same product set through the same logistics platform. Overall, we believe there's about 50 million in the U.K. and Irish marketplace, we can look to exploit. And obviously, our plan is to get as much of that as we possibly can. So a huge step forward in terms of the 5-to-1 project and a huge step forward when our website and our analytics go live shortly. And then behind that, we've got the creation of the Fluidpower Group. In other areas of strategy that we identified a year ago, our investment in expanding our overall management capabilities, HR, customer insight, operations development, and obviously, with due process to our ESG agenda, health, safety and the environment. All those appointments have been made. Very pleased with the input that we're getting from those individuals, and will stand us in good stead as we look to support organic and, obviously, in time, possibly inorganic growth as we generate significant cash resources over the coming year. We also flagged a sense that we believe our target was to move to a single ERP provider in the fullness of time. But in the meantime, our main legacy system that we use, a key platform, that then underpins the Flowtech division, the 5-to-1 project. The partner there has extended support in terms of that write-out to 2026 and, therefore, has given us the scope to take time over that particular decision, particularly the fact that everything is flow based for the first time. Another achievement by our IT systems people in 2021. So very pleased in the other areas away from our commercial branding developments. So again, hopefully, something that people recognize, a great deal of change has taken place in the engine room of the Flowtech business. And overall, our target to create this integrated business model that we believe will drive organic sales growth over the course of the next 12 months, in particular, but over the long term. Okay. In terms of summary and outlook, the key achievements that we've got during the course of the last 12 months, our e-business platform is built. It's in final testing and it will shortly go live. That is a 2.5-year project that comes to fruition. We've managed our inventory. We've matched the demands of our particular marketplace to fit with the disruptive supply chain that we faced. But we're very pleased with the way that, that's worked. And we used the capital resources that we built for ourselves during the previous 2 years to ensure that we could do that without recourse of further investment in the organization. We've achieved the Flowtech 5-to-1 project, a massive project implementation for an organization that, 3 years ago, had no project management capabilities at all, delivered the biggest project in its history. We have grown operating profit in all our segments. Our exit rate was growing. We entered 2022 with a good platform built, and early signs are encouraging for us. And we'd like to think we've dealt well with the COVID-19 impacts, both commercial and people level. Our 2022 focus is to exploit all digital capabilities, create the Fluidpower Group, ensure that our Services division, in particular, returns to the profitability level that we believe it should achieve for us. Overall, our ESG agenda continues to develop, and we've got a sustainability plan built and in play. And hopefully, a return to strong cash generation, as outlined by the analysts now that we've got. Okay. We've countered through that, hopefully, relatively quickly. It's a reiteration of the messages that we delivered in the last 12 months, 18 months overall. And I'd like to think that we'll get some questions that we can answer in the next 5 minutes or so.

[Operator Instructions] Bryce and Russell, as you can see, we've received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Could I just ask you to read out the questions and give responses where it's appropriate to do so, and then I'll pick up for you at the end.

Okay, so first question, Myles.

Yes. I mean, whilst Bryce has been speaking, I've had a chance to sort of see the questions as they popped through. So perhaps if I begin to answer them Bryce, and you can chip in. First question, if you mentioned struggles in the Service division, have you lost any business there? Or has it all just been delayed? Broadly delayed and not lost. I mean, it's interesting to me that when things are tough, you can actually strengthen your relationship with your customers. I used to say that in the old world that I operated in for 25 years, which was turnaround and restructuring, it isn't half as interesting if you can't cement and improve relationships, if you're speaking to people, communicating with people efficiently when things are tough. So broadly speaking, yes, delayed and not gone away. If anything, it's enabled us to get closer to some of our customers who do understand in a difficult world when Nandos can't get chicken, McDonald's can't get milk shakes. They do have some sympathy that we can't find that 1 important component to deliver that GBP 30,000 power pack, the example that Bryce alluded to. I don't think if you're going to give me 2 out of 10 or 10 of 10 for that answer, Bryce. Anything to add?

No, I think that was spot on. So our services division, it's more an element of managing how it controls its margins, how it controls its costs. We talked a year ago about a routine branch review. That's effectively been done. It was disappointing that the back quarter of last year, our order, weren't able to convert into invoice sales. But in the early part of the year, we're certainly seeing that overall come through.

Okay. So the second question is, you've talked about the promising start to '22. Has there been any change over the last few weeks, a Ukraine effect? Well, put another way, are you enjoying a honeymoon period given Mr. Putin's efforts? Difficult to say is the answer. But what I'd equally say is that we were equally encouraged pre-Russia-Ukraine, as we have been post Russia-Ukraine. The trends were already there. There might be an element of people being nervous and stop building. But it was at least as good prior to Mr. Putin doing what he's done as to after he's done it. Again, Bryce, anything you want to add?

Well, as we said in our report, both the Chairman's report and my report as published today, we don't have any material supplier or customer impacts from that particular region, obviously, the horrible things that are going on there. Russia is a major commodities provider, whether that be steel, nickel. Black carbon is one in terms of all that's used in hydraulic hose. Equally, as I've said, our hydraulic hose suppliers are caught in 2023 anyway in terms of supply. So they've got an issue to manage their resource from that perspective. I think probably just make certain elements of the supply chain tighter, and we'll deal with that as it sort of comes through. It clearly won't help overall in terms of general market sentiment and confidence in the medium to longer term, but there are no direct impacts of that particular issue.

I have stopped printing things in color because the cost of paper has tripled in the last few weeks. But aside from that, it was at least as good before the invasion as after. Third question, presumably, the smaller competitors have suffered even more over the last year. Could you comment on the competitive environment? Any opportunistic M&A possibilities? Well, my answer to that is that, yes, I think on average, our competitors won't that have the ability to add 30%, 35% to their inventory levels and benefit off the back of it. So they will have probably on average suffered more than we did. But our aim is to hurt the opposition not sort of go out proactively and acquire things. That's not to say if an opportunity hits our desk, we won't look at it. Of course, we would. But it's all about gaining market share through organic means and, in particular, we've not said a lot about the business and deliberately so today. But where we think that can reach into should those competitors. So no, we're not in a rush to proactively approach people and say, do you fancy selling yourselves. We're just in the market to hurt competitors by achieving organic revenue and, therefore, profit growth.

Without question, there are opportunities out there for us now, but we're all about organic growth play. We need to strengthen our sort of cash position and create the opportunities in order to be able to acquire businesses within our own resources. But I think the other thing that's reiterated right through the COVID period, right in the last 12 months, in particular, is this sector is very resilient. And that's one of the things that we think the niche elements in which you're investing in is something that despite what the markets attempt to do to it in several different ways, it finds a way of making good margins and good money. And that's reflected across all our competitor base. So weekly doing reasonably well out of the current position, and there is the constraints in the supply chain side of things.

I'm going to skip a few questions, Bryce, because I think there's a linked one come through. Your outlook seems more positive than the industry forecasts, which show hydraulic growth of 3.1%, and pneumatics declining by a fraction under 1%. Also wondered if you can expand on the issue with Ireland and Flow solution? Do you want to talk on out growth versus the industry stats, Bryce?

Remember, these industry stats were put together last October by Oxford Economics. There was an element of difficulty in understanding supply chain constraints. They are pitching them at, say, constant prices. And one of the earlier questions here was about how much of our growth is volume and how much of our growth is price. Again, very difficult to pitch across close a 200,000 SKUs business through 4 or 5 different systems. But just to give you a sense of feel, we think that overall prices compared to about 15 months ago are 5% to 7% higher than where they were today. But we're seeing further price inflation sort of coming through. So you've got volume, yes, underneath it. It's probably relatively modest through 2020 in terms of actual price inflation. All that's adding on top of that. I don't think we, particularly in terms of the guidance of the market, have got anything to raise here that certainly analysts are putting out for us. Overall, it's within GBP 12 million, I think, for this year.

Revenue, I think, GBP 115 million.

So overall, 4% growth. But given the quarter-by-quarter revenue figures that Russell went through beforehand, you can say that we've got some reasonable trajectory coming into this year that hopefully that's already reasonably secured for us. And they pick up on one point, though, about RE business and what makes us different to other players. Clearly, the customer experience in the website is a fairly standard commodity these days. And comparable with other websites that I would say is exactly that. It's comparable with other websites. The bit that is the key part of differentiation is our niche and the breadth of products that we've got and the support from our major suppliers in terms of what we're trying to achieve. I'll go back, though, the key hope for us is the analytical capabilities and the e-marketing capabilities that are coming out of having a modern web position. Not so much the marginal sale through the website itself, just through its overall functionality, shall we say.

We've possibly touched on a couple of the questions. There was a question about the GBP 8.5 million inventory build, the price versus volume. I think based on what Bryce was saying in terms of 7%, 8% inflation pressures. You could probably view that as roughly a 20% price, 80% volume answer.

Distribution costs are reduced from 2020 to 2021. I think that's more a facet of volume in a COVID-turnover year. We're going to get pressure behind distribution costs. Obviously, fuel is a key element that we've already got fuel surcharge from FedEx coming through in sort of Q1. So I don't expect any fundamental change in distribution costs per se. The 5-to-1 project has helped us because we're able to consolidate parcels more effectively. And we've seen some slightly better-than-expected results out of that, so not anything in particular sizable from there. I've got a question on addressable markets. It really is reiterating what we talked about in the past. The overall market size stays broadly GBP 1 billion and growing. We've got obviously about GBP 100 million of the U.K. and Irish marketplace, the balance being in the Netherlands. Typically, 40% to 50% is seen as being addressable to a distributor. So we've got 20% to 25% of our U.K. and Irish marketplace. We've not talked in this presentation about wider aspirations. But anybody can say, if you've got a developing weight presence and digital analytical capabilities, the European marketplace, the same product set through an efficient distribution platform is an area of quite significant potential organic growth for us in the medium term. We focus in U.K. and Ireland certainly in the short term. So we're not short of addressable market for us to attack. 5-to-1 project, the obstacles to the group solution. The Flowtech Fluidpower Group plan obstacles are no individual aspects of that plan is particularly complex given the experiences that we've got, IT change, logistics change. We've got a lot of experience over the past couple of years. Great learning experiences that come out of that, both for me as an individual and the team. But there are several moving parts to it. So we're just going to work through it diligently and not be too clinical about how we approach that. But nothing that particularly frightens us in terms of overall complexity of what we've got to achieve. I would like to think that by our end of August or September half year trading update, many aspects of that integration will have been done or anything that's remaining will have quite a clear path to its creation.

There was the question, what milestones or news flow should we look for through 2022? Well, we no longer do quarterly trading update. So myself and Bryce will be updating, hopefully, this audience and a few others, probably in August. We referenced to the half year results. But it probably is worth -- forgive me, Bryce, if you did mention it. But there's 2 or 3 clicks and links in our presentation to videos which are on our website, which I personally think are quite informative. It will tell you a lot more about the 5-to-1 project. I mean, that's a 2- or 3-minute video explaining what's been done and what's been achieved. And equally, there's a link to a video of our e-business. So watch this space in terms of videos that are related to our website, but it will obviously sort of speak to you, if there's a need to speak to you. But August, with regards to the half year results, is probably the main information flow.

Okay, we seem to have countered through. There's a lot that have been removed.

And I think you've addressed those questions as you can from investors. And of course, the company will review all questions later today and publish those responses on the Investor in the company platform, just before redirecting investors to provide you with their feedback, which I know is particularly important to you both. Bryce, could I just ask you for a few closing comments?

Well, I'll reiterate the sense of what we're looking to achieve, and that's a fully integrated organization who can balance off the sort of legacy offline skills that have created a GBP 100-plus million business in the first place, often with deep roots going back 50-plus years in terms of the experience and position in the marketplace of its legacy operations. We're now layering on top of that a leading-edge platform, flowtech.co.uk. and all the digital analytics skills that come behind that. So we think we are marrying together the best of the off-line with the clear opportunities that the online will can bring and create the most powerful integrated fluid power business in the U.K. and Ireland.

Bryce, thank you very much. Russell, thank you for updating the as well. 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. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Flowtech Fluidpower PLC, we would like to thank you attending today's presentation, and good morning to you all.