Flowtech Fluidpower seeks to create sustainable long-term value across all stakeholder groups. Its people and the service they deliver are at the heart of this objective.

Our people

Engaged and committed employees are integral to our overall Group performance and the delivery of great customer service. The Board places a strong emphasis on employee recruitment and retention, which starts from the top; giving leaders the appropriate support, training and tools to build confident, motivated teams. Employees across each business are supported and rewarded in varying degrees through performance reviews, training, additional holidays for attendance, profit share schemes and other softer perks.

This year a number of new employee development initiatives have been introduced. Each profit centre has the freedom to use whichever tools are appropriate for their business and is also supported with individual initiatives at a local level. Retention is currently measured by average turnover and length of service. These statistics are outlined in the table below;

Employee statistics201820172016
Number of employees*573414291
Length of service7.58.99.6
Avg employee turnover11%9%7%

* Annual average.

Apprentices

Many of our businesses have long traditions of apprenticeships. Through training and encouragement, we nurture and develop local talent and support school leavers seeking commercial or engineering experience. We enjoy a high retention rate as most apprentices go on to secure permanent positions with us. In 2018 we retained all three apprentices who graduated across the Group, one in the FTUK supply chain team, one in purchasing at Group HES and one in business administration at Orange County UK.

Employee engagement

The Board recognises the value employee engagement has on business performance and customer loyalty. In October 2018 the Group introduced an Employee Engagement Programme to measure and strengthen employee satisfaction across the Group. All Profit Centres will have implemented this programme by June 2019 and be working on individual areas of improvement. This survey will be conducted annually by each Profit Centre Director.

Continuous learning through training

Business performance and ongoing success are directly related to the quality and effective performance of employees. It is the policy of the Group to ensure that employees are able to improve their performance by having appropriate access to effective training, development, coaching and counselling facilities. Induction training sets the foundation for all employees and introduces the Group's operational best and required practices which are documented in comprehensive Standard Practice Instructions (SPIs). This is followed by specific on-the-job training, in-house or at accredited third parties. Many of our engineering apprentices attend courses with the National Fluid Power Centre (NFPC), the North Notts College, local colleges or training with our company mentors. Across the Group, over 300 courses were attended by employees in 2018. To build and share technical knowledge across the Group, in 2018 an online technical forum was introduced, allowing engineers and salespeople across the Group to post and answer questions.

Leadership Trust

This year, the 'Leadership Trust' programme was introduced for all Profit Centre Directors, which includes an initial three-day or five-day course, followed by an ongoing coaching programme. The programme incorporates a 360-degree leader audit along with tailored expert coaching, designed to help managers understand and motivate teams and shape culture for maximum impact. It is expected all Profit Centre Directors will have completed by the programme by the end of 2020.

Mentor programme

Fluid power is a niche industry; loss of trained, specialist personnel poses a significant risk for the business. Each business is responsible for its own business continuity plans, which are supported by the Group in terms of training and development of key personnel. In 2018, the Group started a mentor programme, which sees former Group business owners and important industry contacts guide and assist various members of the Group on a one-to-one basis. This investment will ensure Group leaders have the appropriate knowledge and support to take their business forward in the years ahead.

Engaged and committed employees are integral to our overall Group performance and the delivery of great customer service.

Employee rewards

In 2017 a profit share scheme was introduced across the Company. All profit centres are invited to take part; however they must meet a minimum performance threshold of 20% annual return on investment to be included in the scheme. Profit Centre Directors then have the autonomy to allocate this financial reward on an annual basis across their teams subject to approval by the Chief Operating Officer, which rewards employees and in many cases offers an additional motivational incentive for future years. Those profit centres not in the scheme can choose to reward employees from their own profits.

Diversity

The Company is an Equal Opportunity Employer and recruits based on merit. This means that the Company's established policy is to ensure that no unlawful discrimination occurs, against any person on the grounds of colour, sex, sexual orientation, marital status, race, religion, nationality, ethnic or national origin or age. The Company's policy covers direct and indirect discrimination and failure to make reasonable adjustments for disabled employees, victimisation and harassment. We recognise and value all forms of diversity in our employees and endeavour to promote diversity in our workplace to enhance the success of our Group. We currently employ 24% females across the Group with 27% of senior management positions occupied by females. In 2018 the Group appointed its first female operations board member, Tamara Reiners, who was promoted to Profit Centre Manager for Flowtechnology Benelux in October 2018.

The Group recognises the importance of work-life balance, especially for employees with family commitments. Where the demands of the business allow, flexible working is encouraged. A number of females in the business have returned to work following maternity leave and this additional flexibility, and in many cases career progression, has increased their commitment and attitude towards the business.

Human rights and modern slavery

Our respect for human rights is implicit in our employment practices; the rights of every employee are respected and every employee is treated with dignity and consideration. Our employment practices are designed to attract, retain, motivate and train people and to respect their rights. We do not use child labour, nor do we use forced labour. We make regular supplier visits to ensure our supply chain maintains the same standards of integrity and is free from modern slavery. We recognise freedom of association by permitting our employees to establish and join organisations of their own choosing on their own initiative, and we recognise collective bargaining where required by local laws. Our Modern Slavery Statement can be found online at www.flowtechfluidpower.com/investors/governance/modern-slavery-statement

Environment, health & safety

The Group remains committed to providing a safe and healthy working environment and supports individual profit centre efforts which reduce the Group's overall impact on the environment. The Chief Operating Officer has overall responsibility for health and safety (H&S) practices, ensuring all PCDs review and address any concerns on a monthly basis in accordance with their business needs, risk profile and local regulations.

SPIs across the Group, along with local requirements provide guidance for each profit centre and must be included as part of new employee inductions and new acquisitions. Additional training is requested for employees depending on their job role and forms part of an ongoing improvement process. Over 120 H&S related courses were attended by employees in 2018.

Each business has either a H&S representative or H&S committee, responsible for monitoring and improving H&S procedures and practices. H&S is measured through accident rates. Our accident rates are very low given the number of employees and the amount of manual work, with only one RIDDOR incident and 11 lost time accidents (2017: No lost time accidents). We are currently working with Croner to standardise procedures across our UK and Irish sites. Croner advise the Board that all sites except for Skelmersdale will go into the programme later in 2019.

All incidents are investigated thoroughly and preventative measures put in place to mitigate any further reoccurrences.

Local initiatives towards health and fitness are encouraged, such as onsite gyms or subsidised membership to local leisure facilities, cycle to work schemes, fresh fruit and water for employees. Examples of local improvements made with various profit centres this year include: introduction of anti-fatigue mats, ergonomic work stations, air-purification plants, weekly fruit for employees.

The environment

The Group is mindful of the impact that its operations have on the environment and is committed to reducing its carbon footprint, encouraging individual profit centres to introduce environmentally friendly practices available for their business.

Some of the measures in place include:

  • Recycling of as much waste as possible including plastic, paper, metals and cardboard. One hundred percent of paper is recycled across all sites. Orange County UK recycle 100% of oil rags. At most warehousing and production sites, paper and cardboard are shredded and reused again in packaging. Personal recycling bins are used at most sites. This year Flowtechnology UK (FTUK) found a local source for recycling non-usable pallets.
  • Low energy, motion-sensored lighting within warehouses.
  • Over 80% of Group HES's power is generated by solar panels which were fitted in 2014. Furthermore, the company currently has three electric company cars and two charging points onsite. We aim to share such initiatives across the Group
  • Encouraging cycle use through local government initiatives in both the UK and the Netherlands
  • Wherever possible, orders and invoices to suppliers and customers are sent via Electronic Data Interchange (EDI) with a consequent reduction in the use of paper
  • Adopting digitalised processes – including use of apps and scanners to aid customer ordering, Dropbox for data sharing and online meeting software. This year, Zoom software has proved to be a highly efficient tool to aid business performance and a reduced need to travel for meetings.
  • Financial reports are issued to the majority of Shareholders as an interactive report on our website
  • Reduced print of paper where possible. In 2018 FTUK made the decision to revert to a two-year rather than annual catalogue, reducing printing ink and paper use. The Company is also working on a "Digital Distributorship" where customers no longer requiring a hard copy catalogue will still be able to retain their distributor status, which would reduce the company's carbon footprint even further.

Partnerships with customers

As a trusted partner in fluid power, we aim to be the most cost-effective provider of a quality service to all customers, ensuring we deliver end-to-end fluid power solutions from a single source.

Regardless of size, our Group values every customer and is committed to developing mutually beneficial relationships at local, national and international level. Continued dialogue has enabled the Group to develop its product and service offer and so match these changing requirements.

Through our agile approach, our Group employees are driven towards finding solutions which create efficiencies for ourselves but more importantly our customers. This requires extensive knowledge, creativity and collaboration with customers and suppliers. Here are some of the ways the Group added value in 2018.

  • Introducing a new website platform for customers to market to their own customers.
  • New supplier partnership in dust suppression.
  • Launch of new hose builder for customers.
  • Growth through customer partnerships.

Partnerships with suppliers

The Group nurtures its relationships with leading fluid power suppliers while developing its complementary exclusive brands and own manufactured products. We have a dedicated team in Shanghai to manage relationships with our Far Eastern suppliers, ensuring we can overcome local cultural and language barriers.

This year, the Group has placed increased emphasis on building strategic partnerships with key suppliers. New activities introduced in 2018 include:

  • Invitation to present at Operational Board Meetings, technical forums and sales conferences, giving insight into the latest manufacturer trends and developments. This year the following suppliers have presented at these events: Parker, Eaton, Tec, Pareto Law.
  • Joint marketing initiative with Roquet and Honeywell at the LAMMA trade shows to strengthen the marketing of both the manufacturer brand and the Flowtech Fluidpower Group profit centres, and training to Group sales personnel.
  • Increased supplier training – a number of companies within the Group have travelled abroad to suppliers for specific product training and factory tours and equally suppliers have held training at our company premises.
  • Enhanced communications through a biannual supplier newsletter.

This year we have secured many new distribution agreements across the Group which further expands our product portfolio to existing customers and enables us to secure business with new customers.

Four significant developments include:

  • Group HES – partnership with National Instruments
  • Group HES – distribution rights for Parker Complete Piping Solution product.
  • Hydravalve being awarded sole distributorship in the UK for J&J Electric Actuators and formed a new supplier relationship with Prisma, through attendance at the BVAA Spring conference in May.
  • Indequip – now partnering with Focgo and Aircom, and additionally securing sole distribution for Insert Deal and Eletrotec.

Representatives from the Group either exhibited at or attended over 15 supplier and end user trade shows in 2018 in the UK, Europe and Asia.

Highlights included the FTUK 2018 Distributor Convention, held at The Royal Armouries Museum in Leeds which was attended by over 40 key suppliers and 120 distributors, who enjoyed a Pioneers of Industry theme. In January four profit centres within the PMC division exhibited as one 'Fluidpower Group' at the LAMMA 2018 agricultural and machinery show. The wider Fluidpower Group also attended Hillhead Expo which brings together over 500 manufacturers in construction and quarry management. Over 20,000 visitors attended this three-day event. Hydravalve attended Valve World in Dusseldorf, enabling the Company to meet up with Chinese and European suppliers and additionally find new business.

We continue to have close ties with trade associations such as BFPA, FADA, BVAA and NFPC with various members across the Group sitting on their committees. This year we exhibited at the North Notts Training Centre, where over 60 distributors and manufacturers share ideas and new products, with student attendance also.

Community

Bringing together employees outside of work promotes cohesion in the workplace. Employees are encouraged to participate in regular fundraising events for local and national charities. This year the Group raised over £10k for 12 charities.

The Strategic Report has been approved by the Board.

Bryce Brooks
Chief Executive Officer
29 April 2019