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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Brammer | LSE:BRAM | London | Ordinary Share | GB0001195089 | ORD 20P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 164.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 2680C
Brammer PLC
29 August 2008
PRESS RELEASE
29 August 2008
2008 INTERIM RESULTS
CONTINUED GROWTH DRIVES PERFORMANCE
Brammer plc, the leading pan European added value technical distributor, today announces its results for the six months ended 30 June
2008.
FINANCIAL SUMMARY
6 months to 6 months to
30 June 2008 30 June 2007 Change
£m £m
Revenue 241.6 181.8 33%
Operating profit (pre amortisation of 14.4 9.2 57%
acquired intangibles)
Profit before tax (pre amortisation of 11.4 7.2 58%
acquired intangibles)
Profit before tax 11.0 7.2
Net debt (70.6) (53.7)
Earnings per share Pence Pence
Basic - before amortisation of acquired 15.1 10.2 48%
intangibles
Basic 14.6 10.1 45%
Diluted 14.4 10.0 44%
Operating Highlights
* Organic and acquisitive sales growth further strengthens European market leading position. Brammer now established in over 300
locations in 16 countries.
* Overall revenues grew 33%, representing significant market share gains, comprising 11% from organic growth, 10% from acquisitions,
and 12% from exchange gains.
* Key Account sales grew by 29%, now representing 30% of total sales. Six new pan-European contracts were gained. The pipeline
remains strong.
* Operating profit margin (operating profit before amortisation) improved to 5.9% (2007: 5.0%) reflecting increased volumes, stable
gross margins, and continued cost control.
* Operating profit (before amortisation) increased by 57% to £14.4 million (2007: £9.2 million), including £1.6 million of exchange
gains.
* All acquisitions are integrating well and performing in line with expectations.
* Cash inflow from operating activities was strong at £11.7 million, being 81% of operating profit (before amortisation).
* Net debt at £70.6 million (2007 year end: £59.4 million), after expenditure of £7.5 million on acquisitions and deferred
consideration, £1.8 million on ESOP shares and an adverse £6.7 million exchange rate impact, with working capital ratios broadly unchanged.
* EPS growth (before amortisation) of 48% to 15.1p (2007: 10.2p).
* Interim dividend of 2.6p up 24% (2007: 2.1p).
David Dunn, chairman, said:
"Whilst the overall business environment at present is challenging we believe that Brammer is well positioned with a strong and robust
strategy in a large and diverse market place. Current trading reflects continued growth, as we enter the second half of the year, and the
Board is confident that 2008 will demonstrate another year of significant progress".
"The Board has declared an increased interim dividend of 2.6p (2007: 2.1p). This will be paid on 7 November 2008 to shareholders on the
register at the close of business on 10 October 2008."
Enquiries: Brammer plc 020 7638 9571 (8.00am - 1.00pm)
0161 902 5572 (1.00pm - 4.30pm)
David Dunn, chairman
Ian Fraser, chief executive
Paul Thwaite, finance director
Issued: Citigate Dewe Rogerson Ltd 020 7638 9571
Martin Jackson
Nicola Smith
BRAMMER PLC
2008 INTERIM RESULTS
CHAIRMAN'S STATEMENT
Trading and Financial Performance
I am very pleased to report another strong set of results. The first six months of 2008 have seen a continuation of the significant
growth in sales and profits which has been a feature of Brammer in recent years. Sales in the period totalled £241.6 million (2007: £181.8
million), an increase of 33%. This increase comprised 11% of organic growth, 10% from newly acquired businesses, and 12% of exchange gains.
Operating profit (before amortisation) increased by 57% to £14.4 million (2007: £9.2 million) and pre tax profits (earnings before
amortisation) were up by 58% to £11.4 million (2007: £7.2 million) including £1.4 million of exchange gains. Basic earnings per share
(before amortisation) amounted to 15.1p, up 48% on last year's 10.2p.
Our strategy of organic growth through Key Accounts, product focus, and value added service, coupled with selective acquisitions has
again demonstrably improved the scale and quality of the business. Gross profit margins were stable and in line with the previous year. The
operating margin (before amortisation) increased to 5.9% (2007: 5.0%) reflecting improved operational gearing and good control of costs.
Net borrowings at the end of June amounted to £70.6 million, an increase of £11.2 million from the £59.4 million position reported at 31
December 2007. This increase includes a £6.7 million negative impact from the movement in exchange rates together with non operating cash
expenditure of £7.5 million on acquisitions and deferred consideration payments, and £1.8 million on the purchase of shares for employee
share plans. Cash generated from operating activities of £11.7 million (2007: £0.2 million) was strong and represented 81% of operating
profit (before amortisation). Working capital days were similar to the levels of last year although the absolute levels of working capital
have increased reflecting the continuing sales growth.
The retirement benefit liability at the end of June was £24.6 million (2007: £13.1 million), an increase of £10.3 million in the
liability from 31 December 2007 (£14.3 million). This increase reflects a fall in the market value of the schemes' assets and the impact of
a higher price inflation rate used in the actuarial calculation of future pension liabilities.
Strategy and Acquisitions
Brammer has continued to focus on the implementation of the strategy which was determined for the business some four years ago. Progress
of the growth and cost elements of the strategy is evident in these results and we continue to move forward in terms of our capabilities. In
particular, the investment in systems is beginning to bear fruit with real prospects for improved inventory management across all of our
trading territories. There is still much to be done but we are confident that substantial benefits are achievable from the work plans in
place.
We have also made progress in our acquisition plans with four new businesses having joined the group in 2008 for an initial payment of
£5.9 million, with a maximum consideration of £18.6 million. CBS Rotary Power Motion in the UK and Tecnoforniture in Italy were the two
largest with combined annual sales of over £16 million. The former is being integrated into Brammer UK and provides an important presence in
the West Midlands where we were under represented. Tecnoforniture is a significant move into the MRO market in Italy. Brammer had
established a start up operation in Italy in recent years and the purchase of Tecnoforniture will provide a good opportunity to achieve
genuine scale in this important European territory.
In addition we acquired two small bolt on businesses in Holland and Austria, and purchased a 25% stake in a Romanian business. All of
these additions are consistent with our growth strategy and we will continue to search for further earnings enhancing and strategic
opportunities in the fragmented European MRO market.
Board Changes
In June we announced the retirement of Svante Adde from the Board, having served as a director and chairman of the remuneration
committee since 2005. We thank him for his contribution during that period and wish him well for the future. At the same time we were
delighted to welcome Bill Whiteley to the Board with effect from 1 July. Bill has recently retired as CEO of Rotork plc and we look forward
to the benefits of his wide and relevant experience in the future. Paul Forman has assumed the role of chairman of the remuneration
committee.
Dividend
The interim dividend recommended by the Board is 2.6p, an increase of 24% over last year. This will be paid on 7 November to
shareholders on the register at the close of business on 10 October 2008.
Prospects
Whilst the overall business environment at present is challenging we believe that Brammer is well positioned with a strong and robust
strategy in a large and diverse market place. Current trading reflects continued growth, as we enter the second half of the year, and the
Board is confident that 2008 will demonstrate another year of significant progress.
David Dunn
29 August 2008
CHIEF EXECUTIVE'S REVIEW
Overview
In the first half of 2008 we made significant progress in strengthening Brammer's market leading position in Europe. We concentrated on
the implementation of our strategy under the drivers of Growth, Capabilities, Costs, and Synergies, and continued to progress the concept of
"One Brammer" - a business which can offer consistent products and services in each of over 300 locations in 16 countries. We improved our
ability to deliver to our customers a consistent quality of service across the entire bearings, power transmission and fluid power product
range anywhere in Europe. Brammer already has a strong presence within Europe but our existing leadership position still only represents
around 3% of the market, with growth levels significantly greater than market growth available.
Operational Review
Brammer is the leading European supplier of technical components and related services to the maintenance, repair and operations (MRO)
markets. In the first half of 2008 revenues increased by 33% to £241.6 million (2007: £181.8 million), whilst operating profit (before
amortisation) increased by 57% to £14.4 million (2007: £9.2 million). Operating margin (operating profit before amortisation) improved to
5.9% (2007: 5.0%) benefiting from higher volumes, stable gross margins and continued cost control. Cash generated from operating activities
was £11.7 million in the period compared to £0.2 million for the first half of 2007 reflecting strong control of working capital. Return on
capital employed (based on operating profit before amortisation) improved to 30.7% (2007: 24.8%).
At the end of the first half, total headcount in Brammer (on a full-time equivalent basis and adjusted for acquisitions) was 2,418
compared to 2,406 at the end of last year. Revenues per head, at constant exchange rates, increased by 9.3% to £94,000 for the half year
compared with the same period last year, indicating continuing improvement in productivity.
In the UK, overall sales growth, including the contribution from CBS, was 10.0%, whilst organic sales per working day growth (SPWD) was
7.1%. Gross margins remained steady, and costs were carefully controlled resulting in operating profit growth of 36%. Contracts renewed or
extended included Tarmac, ABF and Unilever, with Key Accounts (representing 46.1% of sales) growing 10.8%. New contracts won which will
contribute to increased growth in the second half included Coca Cola Enterprises, Cadbury, Kautex Textron, Catalent, D S Smith and Aunt
Bessie's. We increased sales through our 38 full-time Insites by 24% and sales to all Insites (i.e. Insites and part-time Insites - those
locations where we have several regular clinics with the customer's staff each week) by 19.9% now operating at 122 locations. Good progress
was made in the important segments of Cement and Aggregates, Building Products, Paper and Packaging, and Water and Power generation, where
our segment focused marketing approach is bearing fruit. We successfully completed the acquisition of CBS Rotary Power Motion Limited, and integration is well underway.
In Germany SPWD on a constant currency basis grew by 14.1%, well ahead of the market. Operational gearing and cost control resulted in
operating profit growth of 35%. Good progress continued in Key Accounts, with revenues up 26.2%, now representing 26.4% of turnover. New
contracts won included Hutchinson and Villeroy & Boch, whilst excellent progress was made in developing business from those contracts won in
2007. Good progress was made in filling out the product range, with pneumatics up 39.3%; our significant investment plan (the addition of
ten technical experts) to grow mechanical power transmission products, including gearboxes and motors, bore fruit with sales up 45% and
accelerating. We now have 8 Insites in Germany, with sales in the first half of £2.25m, up 26.5% on the same period last year. Our focus on
specific market segments yielded good growth in Food and Drink, Utilities, and Building Materials, with 28 customer events across Germany
attracting more than 500 MRO specialists from among our customers, raising the awareness of Brammer as a solution seller for those segments.
In France SPWD on a constant currency basis were up 16.2%, with approximately 5% being accounted for by the acquisition of Centre
Roulement made in December 2007. Gross margin held steady and good cost control resulted in operating profit growth of 84%. We continued our
focus on the Automotive sector, (representing over 20% of our French revenues) where sales grew by 15%. Growth in industrial Key Accounts
was 11.5%, whilst base MRO business grew by 19.9%. New contracts were won with Pasquier, Nutrixo, Saint Gobain, Cemex, ADF and CMI. Our
market focus was on Paper and Packaging, up 15%, Construction, up 16%, and Food and Drink, up 12%.
In Spain SPWD on a constant currency basis grew by 26.3%, with Boada accounting for around 85% of this growth. Gross margin improved,
costs were controlled well, and operating profit increased by 35%. The second quarter was negatively affected by the general transport
strike in June, but good growth has resumed in July and August. We continued to increase our sales to the MRO market (up 3.5%), whilst Key
Account sales grew by 14.5%. We won new contracts with Grifols, Vidrala, Peguform, and Herba Ricemills. Insite growth was 29%, and the
pipeline for new Insites improved. New product introductions contributed to growth with fluid power up 56%, and tools and general
maintenance up 157%.
Within Benelux, the Netherlands SPWD on a constant currency basis were up 15%, with good growth in all areas of the business. We
introduced 19 new product lines in the first half and expect these to generate additional growth in the second half; tools and general
maintenance grew by 46% and pneumatics by 47%. Two new locations were added, and our market segmentation approach resulted in growth of 100%
in Construction and Aggregates, and 45% in Utilities. In Belgium SPWD in constant currency grew by 23.9%, and new Key Accounts were won with
Panasonic, Coca Cola, and DP World. Food and Drink grew by 18%.
Our Polish business developed well, and the integration into Brammer continued. New Key Account business was won with Eaton, Crown and
Timken.
In our Developing Businesses, on a constant currency basis, overall SPWD increased by 46.7%, and total revenues were £13.9 million, up
from £9.2 million last year. In Austria, SPWD declined by 15.6% as we shed unprofitable OEM business, whilst we grew by 15.1% in Food and
Drink, 23.2% in Cement and Aggregates, and 38.5% in Pulp and Paper. In the Czech Republic overall SPWD growth was 50%, new Key Accounts were
gained with TRW and Eaton, Food and Drink grew by 61% and Recycling by 68%. In Hungary, excellent progress continued with new product
introductions and Key Accounts, resulting in SPWD growth of 50%. In Italy we continued to develop our relationship with Key Accounts and
grew SPWD by 19.2% organically (80% including the contribution from Tecnoforniture).
Strategy
Growth
* Overall SPWD growth in constant currency was 19.6%, whilst organic growth (excluding acquisitions made in 2008) on a SPWD basis
was 17.1%.
* The consistent focus of the businesses on a market segmentation approach, increasing our knowledge of customers' processes and
selling to their specific needs, continues to achieve good results - including increased sales in the Automotive segment by 18.5%, in Food
and Drink by 17.5% and in Refining by 33.2%. In the second half year the businesses will continue to roll out segment focused initiatives,
working closely with our key suppliers, to further this growth.
* Key Account sales grew by 29.2%, and represented 29.8% (2007: 30.9%) of total revenues. We won new pan-European contracts with
Valeo, Kraft Food, Henkel, Hutchinson, Rexam and Coca Cola, and expect the rate of Key Account growth to accelerate in the second half.
* We have succeeded in completing four acquisitions in the year to date, and acquired an initial 25% stake in a Romanian business,
and seek to complete further acquisitions in the second half. Acquisitive revenues to date total £17.5 million on an annualised basis. Our
acquisition pipeline remains strong and we see continuing opportunities to develop further candidates for acquisition.
Costs/Synergies
* We continued to develop closer relationships with strategic suppliers, and increased the concentration of spend with those
suppliers, leading to both cost benefits and greater supplier marketing support.
* Implementation of Momasse, our best-practice demand forecasting and stock planning system continued. This is increasingly enabling
us to identify opportunities to both optimise and rationalise our stock profile while improving service capability.
Capability
* A crucial component of our success as a service business is the skill and commitment of our 2,500 people located in over 300
locations in 16 countries. Our people have to maintain their understanding of the technical products that we sell as well as the
applications within which they are used. As an MRO supplier we are constantly seeking ways to provide to our customers the products and
services which will improve their production efficiency, reduce their overall cost of acquisition, and reduce their working capital. This
requires extensive training which is provided for all our technical sales people via our suppliers, and through Brammer's own internal
programmes.
* We continue to roll out our bespoke Distributed Learning collateral. This suite of programmes is made available to our people in 8
languages electronically. In crucial customer facing areas of the business the goal is to achieve 100% take up of the two major foundation
programmes, which explain the technical aspects of the product range and the fundamental way the business works. Additional modules provide
our specialists with an understanding of key processes in the area of managing Key Accounts and our Cost Savings approach, one of the core
elements of our Value Proposition.
The future
Our strategy continues to prove to be effective. We have achieved significant market share gains in the first half of 2008, through
growth in our targeted market segments, in the area of Key Accounts, through effective cross-selling, and by acquisition. We have a strong
presence within Europe upon which to build and believe that the continued application of our growth drivers will help us achieve growth
levels significantly greater than the market for many years to come.
Ian Fraser
29 August 2008
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that to the best of their knowledge:
This consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting' as endorsed
and adopted by the EU;
The interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have materially affected the financial
position or performance of the entity during that period; and any changes in the related party transactions described in the 2007 Annual
Report.
On behalf of the Board
D Dunn
Chairman
P Thwaite
Finance director
29 August 2008
Brammer CONSOLIDATED INTERIM INCOME STATEMENT
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Continuing operations
Revenue 2 241,611 181,751 379,577
Cost of sales (169,162) (126,874) (264,228)
Gross profit 72,449 54,877 115,349
Distribution costs (58,079) (45,726) (95,469)
Amortisation of acquired (385) (85) (444)
intangibles
Total distribution costs (58,464) (45,811) (95,913)
Operating profit 2 13,985 9,066 19,436
Operating profit before 14,370 9,151 19,880
amortisation of acquired
intangibles
Amortisation of acquired (385) (85) (444)
intangibles
Operating profit 13,985 9,066 19,436
Finance expense (3,013) (1,983) (4,611)
Finance income 64 67 96
Profit before tax 11,036 7,150 14,921
Taxation 3 (3,312) (2,145) (4,473)
Profit for the period 7,724 5,005 10,448
attributable to equity
shareholders
Earnings per share - total
Basic 4 14.6p 10.1p 20.4p
Diluted 4 14.4p 10.0p 20.1p
Earnings per share - on profit
before amortisation of
acquired intangibles
Basic 4 15.1p 10.2p 21.0p
Diluted 4 15.0p 10.2p 20.8p
The notes on pages 13 to 24 form an integral part of this consolidated interim financial information.
Brammer CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the period 7,724 5,005 10,448
Net exchange differences on 3,296 (197) 2,926
translating foreign operations
Actuarial (losses)/gains on pension (11,492) 10,982 8,782
schemes
Deferred tax on actuarial 3,235 (3,292) (3,087)
losses/gains on pension schemes
Excess tax on share option schemes 35 422 (279)
Net (losses)/gains not recognised (4,926) 7,915 8,342
in income statement
Total recognised income and expense 2,798 12,920 18,790
The notes on pages 13 to 24 form an integral part of this consolidated interim financial information.
Brammer CONSOLIDATED INTERIM BALANCE SHEET
30 June 2008 30 June 2007 31 Dec 2007
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Assets
Non-current assets
Goodwill 5 69,816 47,056 54,464
Acquired intangible assets 5 4,585 1,120 4,433
Other intangible assets 5 4,973 4,450 5,013
Property, plant and equipment 6 14,190 12,263 13,250
Investment in associate 167 - -
Deferred tax assets 7,236 4,514 4,329
100,967 69,403 81,489
Current assets
Inventories 73,639 54,289 67,926
Trade and other receivables 99,919 74,753 78,172
Cash and cash equivalents 7 18,861 5,251 10,464
192,419 134,293 156,562
Liabilities
Current liabilities
Financial liabilities - 7 (18,567) (14,822) (8,393)
borrowings
Trade and other payables (101,880) (74,163) (84,472)
Deferred consideration (6,413) (270) (147)
Current tax liabilities (5,190) (3,894) (4,016)
(132,050) (93,149) (97,028)
Net current assets 60,369 41,144 59,534
Non-current liabilities
Financial liabilities - 7 (70,868) (44,158) (61,475)
borrowings
Deferred tax liabilities (6,377) (4,284) (5,797)
Provisions (841) (837) (858)
Deferred consideration (15,200) (9,235) (14,329)
Retirement benefit obligations 8 (24,633) (13,133) (14,257)
(117,919) (71,647) (96,716)
Net assets 43,417 38,900 44,307
Shareholders' equity
Share capital 9 10,587 10,569 10,575
Share premium 9 18,089 17,985 18,017
Translation reserve 9 5,098 (1,321) 1,802
Retained earnings 9 9,643 11,667 13,913
Total equity 43,417 38,900 44,307
The notes on pages 13 to 24 form an integral part of this consolidated interim financial information.
Brammer CONSOLIDATED INTERIM CASH FLOW STATEMENT
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Retained profit 7,724 5,005 10,448
Tax charge 3,312 2,145 4,473
Depreciation of tangible and 2,608 1,657 3,952
intangible assets
Share options - value of 685 583 1,191
employee services
Gain on sale of property, plant (18) (5) (169)
and equipment
Net financing expense 2,949 1,916 4,515
Movement in working capital (5,594) (11,057) (7,681)
Cash generated from operating 11,666 244 16,729
activities
Interest received 64 67 96
Interest paid (2,620) (1,378) (4,188)
Tax paid (1,606) (526) (2,432)
Pension obligations (1,056) (1,096) (2,172)
Net cash generated from/(used 6,448 (2,689) 8,033
in) operating activities
Cash flows from investing
activities
Acquisition of subsidiaries (5,916) (7,362) (12,375)
(net of cash/excluding debt
acquired)
Investment in associate (167) - -
Deferred consideration paid on (1,404) - -
prior acquisitions
Proceeds from sale of property, 159 32 490
plant and equipment
Purchase of property, plant and (1,463) (2,033) (3,983)
equipment
Additions to software (415) (470) (1,433)
development
Net cash used in investing (9,206) (9,833) (17,301)
activities
Cash flows from financing
activities
Net proceeds from issue of 84 15,341 15,379
ordinary share capital
New loans taken out/(repayment) 12,104 (6,505) (3,112)
of loans
Finance lease principal (38) (6) 148
payments
Dividends paid to shareholders - - (3,327)
Purchase of own shares (1,768) - -
Net cash generated from 10,382 8,830 9,088
financing activities
Net increase/(decrease) in cash 7,624 (3,692) (180)
and cash equivalents
Exchange gains and losses on 273 (10) 606
cash and cash equivalents
Cash and cash equivalents at 7,939 7,513 7,513
beginning of period
Net cash at end of period 15,836 3,811 7,939
Cash and cash equivalents 18,861 5,251 10,464
Overdrafts (3,025) (1,440) (2,525)
Net cash at end of period 15,836 3,811 7,939
The notes on pages 13 to 24 form an integral part of this consolidated interim financial information.
Brammer NOTES TO THE INTERIM FINANCIAL INFORMATION
1 STATUS OF INTERIM REPORT AND ACCOUNTING POLICIES
General information
Brammer plc is a company incorporated and domiciled in the UK, and listed on the London Stock Exchange.
This consolidated interim financial information was approved for issue by a duly appointed and authorised committee of the Board on 29
August 2008.
This consolidated interim financial information for the six months ended 30 June 2008 does not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2007 were approved by the Board on 25
February 2008 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section 237 of the Companies Act 1985.
The consolidated financial statements of the group for the year ended 31 December 2007 are available from the company's registered
office or website (www.brammer.biz).
This consolidated interim financial information has been reviewed, not audited.
Basis of preparation
This consolidated interim financial information for the six months ended 30 June 2008 has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, "Interim financial reporting" as adopted by the EU.
The consolidated interim condensed financial information should be read in conjunction with the annual financial statements for the year
ended 31 December 2007 which have been prepared in accordance with IFRSs as adopted by the EU.
The financial information is presented in pounds sterling and has been prepared on the historical cost basis.
Accounting policies
The principal accounting policies adopted in the preparation of this interim financial information are included in the consolidated
financial statements for the year ended 31 December 2007. These policies have been consistently applied to all the periods presented.
No standards have been early adopted by the group. The implications for the group of new standards, amendments to standards or
interpretations which are mandatory for the first time for the financial year ending 31 December 2008 are summarised below.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
New standards, amendments to standards or interpretations
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year ending
31 December 2008:
IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for annual periods beginning on or after 1 March 2007. This
interpretation will have no significant impact on the group results or position.
IFRIC 12, 'Service concession arrangements', effective for annual periods beginning on or after 1 January 2008. Management do not expect
this interpretation to be relevant for the group.
IFRIC 14, 'IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction', effective for annual
periods beginning on or after 1 January 2008. As the UK defined benefit scheme is in deficit management do not expect this interpretation to
be relevant for the group.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year
ending 31 December 2008 and have not been early adopted:
IFRS 8, 'Operating segments', effective for annual periods beginning on or after 1 January 2009. Management do not foresee any changes
to the group's business segments.
IAS 23 (amendment), 'Borrowing costs', effective for annual periods beginning on or after 1 January 2009. This amendment is not relevant
to the group as the group does not have any qualifying assets.
IFRS 2 (amendment), 'Share-based payment', effective for annual periods beginning on or after 1 January 2009. Management is assessing
the impact of changes to vesting conditions and cancellations on the group's share option schemes.
IFRS 3 (amendment), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS
28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is
assessing the impact of the new requirements regarding acquisition accounting, consolidation and associates on the group.
IAS 32 (amendment), 'Financial instruments: presentation', and consequential amendments to IAS 1, 'Presentation of financial
statements', effective for annual periods beginning on or after 1 January 2009. This is not relevant to the group, as the group does not
have any puttable instruments.
IFRIC 13, 'Customer loyalty programmes', effective for annual periods beginning on or after 1 July 2008. Management is evaluating the
effect of this interpretation on its revenue recognition.
Accounting estimates and judgements
The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount of income, expense, assets and liabilities. The significant estimates and
judgements made by management were consistent with those applied to the consolidated financial statements for the year ended 31 December
2007.
Risks and uncertainties
The principal strategic level risks and uncertainties affecting the group remain those set out on pages 18 and 19 in the 2007 Annual
Report.
The chairman's statement and chief executive's review in this interim report include comments on the outlook for the remaining six
months of the financial year.
2 SEGMENTAL ANALYSIS
The group is primarily controlled on a country by country basis in line with the legal structure of the group. Segment assets include
property, plant and equipment, intangible assets, inventories, and trade and other receivables. Segment liabilities comprise trade and other
payables, and provisions. All inter-segmental trading is at an arms-length basis.
UK Germany France Spain Benelux Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30 June 2008
Revenue
Sales to external customers 66,128 62,923 38,073 22,403 23,205 28,879 241,611
Inter company sales 354 966 386 322 1,062 (3,090) -
Total 66,482 63,889 38,459 22,725 24,267 25,789 241,611
Operating profit before
amortisation of acquired
intangibles
2,423 4,747 1,481 2,088 1,967 1,664 14,370
Amortisation of acquired
intangibles (385) (385)
Total operating profit 2,423 4,747 1,481 2,088 1,967 1,279 13,985
Finance expense (3,013)
Finance income 64
Profit before tax 11,036
Tax (3,312)
Profit for the period 7,724
Segment assets 44,416 31,898 34,966 25,704 23,294 37,028 197,306
Goodwill 5,270 32,077 4,536 4,805 7,358 15,770 69,816
Investment in associate - - - - - 167 167
49,686 63,975 39,502 30,509 30,652 52,965 267,289
Cash 18,861
Deferred tax 7,236
Total assets 293,386
Segment liabilities (25,879) (12,035) (24,194) (14,294) (11,330) (12,300) (100,032)
Current tax (5,190)
Deferred tax (6,377)
Dividends (2,689)
Deferred consideration (21,613)
Financial liabilities (89,435)
Retirement benefit obligations (24,633)
Total liabilities (249,969)
Net assets 43,417
Other segment items
Capital expenditure 522 303 89 74 233 657 1,878
Depreciation and amortisation (690) (219) (134) (237) (280) (1,048) (2,608)
2 SEGMENTAL ANALYSIS (continued)
UK Germany France Spain Benelux Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30 June 2007
Revenue
Sales to external customers 60,269 47,819 28,464 15,581 17,098 12,520 181,751
Inter company sales 149 810 301 205 784 (2,249) -
Total 60,418 48,629 28,765 15,786 17,882 10,271 181,751
Operating profit before
amortisation of acquired
intangibles
1,777 3,515 804 1,545 1,333 177 9,151
Amortisation of acquired
intangibles (85) (85)
Total operating profit 1,777 3,515 804 1,545 1,333 92 9,066
Finance expense (1,983)
Finance income 67
Profit before tax 7,150
Tax (2,145)
Profit for the period 5,005
Segment assets 42,124 24,259 26,471 16,551 17,098 20,372 146,875
Goodwill 761 27,264 2,171 1,261 5,919 9,680 47,056
42,885 51,523 28,642 17,812 23,017 30,052 193,931
Cash 5,251
Deferred tax 4,514
Total assets 203,696
Segment liabilities (24,230) (8,564) (15,497) (10,577) (7,292) (6,622) (72,782)
Current tax (3,894)
Deferred tax (4,284)
Dividends (2,218)
Deferred consideration (9,505)
Financial liabilities (58,980)
Retirement benefit obligations (13,133)
Total liabilities (164,796)
Net assets 38,900
Other segment items
Capital expenditure 1,161 33 142 136 456 575 2,503
Depreciation and amortisation (591) (190) (117) (127) (193) (439) (1,657)
3 TAXATION
The charge for taxation is recognised based on management's best estimate of the weighted average annual corporate tax rate expected for
the full financial year. The estimated average annual tax rate used for 2008 is 30% (the estimated tax rate for the first half year of 2007
was 30%).
4 EARNINGS PER SHARE
Half year 2008
Earnings per share
Earnings Basic Diluted
£'000
Weighted average number of shares in issue 52,899 53,500
('000)
Total - all continuing operations
Profit for the period 7,724 14.6p 14.4p
Amortisation of acquired intangibles 385
Tax on amortisation of acquired intangibles (96)
Earnings before amortisation of acquired 8,013 15.1p 15.0p
intangibles
Half year 2007
Earnings per share
Earnings Basic Diluted
£'000
Weighted average number of shares in issue 49,572 49,882
('000)
Total - all continuing operations
Profit for the period 5,005 10.1p 10.0p
Amortisation of acquired intangibles 85
Tax on amortisation of acquired intangibles (25)
Earnings before amortisation of acquired 5,065 10.2p 10.2p
intangibles
Full year 2007
Earnings per share
Earnings Basic Diluted
£'000
Weighted average number of shares in issue 51,215 51,883
('000)
Total - all continuing operations
Profit for the financial year 10,448 20.4p 20.1p
Amortisation of acquired intangibles 444
Tax on amortisation of acquired intangibles (114)
Earnings before amortisation of acquired 10,778 21.0p 20.8p
intangibles
The number of shares in issue increased following the placing of 4,795,000 shares on 23 April 2007.
5 INTANGIBLE ASSETS
Goodwill Acquired Software
intangibl Developme
es nt
£'000 £'000 £'000
Cost
At 1 January 2008 54,464 5,727 8,888
Exchange adjustments 5,127 778 467
Additions 1,211 - 415
Acquisitions 9,014 - -
At 30 June 2008 69,816 6,505 9,770
Amortisation
At 1 January 2008 - 1,294 3,875
Exchange adjustments - 241 277
Charge for the period - 385 645
At 30 June 2008 - 1,920 4,797
Net book value
At 30 June 2008 69,816 4,585 4,973
At 31 December 2007 54,464 4,433 5,013
6 PROPERTY, PLANT AND EQUIPMENT
Land and Equipment Total
Buildings
£'000 £'000 £'000
Cost
At 1 January 2008 12,514 27,195 39,709
Exchange adjustments 600 1,198 1,798
Additions 251 1,212 1,463
Acquisitions - 1,149 1,149
Disposals (496) (360) (856)
At 30 June 2008 12,869 30,394 43,263
Depreciation
At 1 January 2008 5,881 20,578 26,459
Exchange adjustments 193 894 1,087
Charge for the period 292 1,286 1,578
Acquisitions - 664 664
Disposals (395) (320) (715)
At 30 June 2008 5,971 23,102 29,073
Net book value
At 30 June 2008 6,898 7,292 14,190
At 31 December 2007 6,633 6,617 13,250
7 CLOSING NET DEBT
At 30 June 2008 At 30 June 2007 At 31 Dec 2007
£'000 £'000 £'000
Borrowings - current - (3,025) (1,440) (2,525)
overdrafts
Borrowings - current portion (15,542) (13,382) (5,868)
of long term loans
Borrowings - non-current (70,868) (44,158) (61,475)
Cash and cash equivalents 18,861 5,251 10,464
Closing net debt (70,574) (53,729) (59,404)
Reconciliation of net cash
flow to movement in net debt
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
£'000 £'000 £'000
Net increase/(decrease) in 7,624 (3,692) (180)
cash
Net loans and leases (taken (12,066) 6,511 2,964
out)/repaid
(4,442) 2,819 2,784
Loans taken on as part of - (2,433) (2,845)
businesses acquired
Exchange (6,728) 61 (5,167)
Movement in net debt (11,170) 447 (5,228)
Opening net debt (59,404) (54,176) (54,176)
Closing net debt (70,574) (53,729) (59,404)
8 PENSIONS
The valuations used for IAS 19 disclosures have been based on the most recent actuarial
valuation at 31 December 2005 updated by KPMG LLP to take account of the requirements of
IAS 19 in order to assess the liabilities of each of the schemes at 30 June 2008. Assets
are stated at their market value at 30 June 2008.
The financial assumptions used
to calculate the liabilities
under IAS 19 are:
UK
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
Inflation rate 4.05% 3.20% 3.35%
Rate of increase of pensions 4.05% 3.20% 3.35%
in payment
Rate of increase for deferred 4.05% 3.20% 3.35%
pensioners
Discount rate 6.20% 5.70% 5.70%
Netherlands
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
Inflation rate 2.70% 2.10% 2.00%
Rate of increase in salaries 3.70% 3.10% 3.00%
Rate of increase of pensions 2.70% 2.10% 2.00%
in payment
Rate of increase for deferred 2.70% 2.10% 2.00%
pensioners
Discount rate 6.70% 5.20% 5.50%
The amounts recognised in the
balance sheet are determined
as follows:
30 June 2008 30 June 2007 31 Dec 2007
£m £m £m
Present value of defined 101.3 91.0 95.9
benefit obligations
Fair value of plan assets (76.7) (77.9) (81.6)
Net liability recognised in 24.6 13.1 14.3
the balance sheet
The amounts recognised in the
income statement are as
follows:
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
£m £m £m
Current service cost 0.1 0.1 0.2
Interest cost 2.7 2.5 4.9
Expected return on plan assets (2.7) (2.5) (5.0)
Total pension expense included 0.1 0.1 0.1
within distribution costs
Analysis of the movement in
the balance sheet net
liability
6 months to 6 months to Year to
30 June 2008 30 June 2007 31 Dec 2007
£m £m £m
Opening 14.3 25.2 25.2
Exchange adjustments - - 0.1
On-going expense as above 0.1 0.1 0.1
Employer contributions (1.3) (1.2) (2.3)
Actuarial losses/(gains) 11.5 (11.0) (8.8)
recognised in the 'SORIE'
Closing 24.6 13.1 14.3
The pension expense has been included in distribution costs. The actual return on plan
assets was a negative £5.2m (2007: £3.1m positive return). The retirement benefit
liability at the end of June was £24.6m (2007: £13.1m), an increase of £10.3m in the
liability from 31 December 2007 (£14.3m). This increase reflects the recent fall in the
market value of the schemes' assets combined with the impact of a higher price inflation
rate used in the actuarial calculation of future pension liabilities.
9 CHANGES IN SHAREHOLDERS' EQUITY
Share Share Treasury Translation Retained
Capital Premium Shares reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
For the period ended 30 June
2008
At 1 January 10,575 18,017 (53) 1,802 13,966 44,307
Shares issued during the 12 72 - - - 84
period
Profit for the period -
attributable to equity - - - 7,724 7,724
shareholders
Unrealised exchange movement - - - 3,296 - 3,296
Purchase of own shares - - (1,768) - - (1,768)
Transfer on vesting of own - - 1,746 - (1,746) -
shares
Current tax on shares vesting - - - - 35 35
Deferred tax on shares vesting - - - - (35) (35)
Value of employee services - - - - 685 685
Excess tax on share option - - - - 35 35
schemes
Dividends - - - - (2,689) (2,689)
Actuarial losses on pension - - - - (11,492) (11,492)
schemes
Tax on actuarial losses on - - - - 3,235 3,235
pension schemes
Movement in period 12 72 (22) 3,296 (4,248) (890)
At 30 June 10,587 18,089 (75) 5,098 9,718 43,417
Purchase of own shares
The group acquired 645,351 of its own shares during the period through the Brammer plc Employee Share Ownership Trust ("the Trust"). The
total amount paid to purchase the shares was £1,767,556 which has been deducted from shareholders' equity. The shares are held by the Trust
to meet vestings under the group's performance share plans and share matching plans.
Tranches of these plans vested during the period and 658,630 shares were transferred to directors and senior managers in order to
satisfy these vestings.
Ordinary shares issued under employee share option schemes
Options exercised during the period under the group's employee share option schemes resulted in 61,425 ordinary 20p shares being issued
with exercise proceeds of £84,000.
The number of ordinary 20p shares in issue at 30 June 2008 was 52,939,122 (30 June 2007: 52,865,922; 31 December 2007: 52,877,697).
Dividends
A dividend, amounting to £2,689,000, which relates to 2007, was paid on 4 July 2008 (2007: £2,218,000). In addition, the directors
propose an interim dividend of 2.6p per share (2007: 2.1p per share) payable on 7 November 2008 to shareholders who are on the register at
10 October 2008. This interim dividend, amounting to £1,376,000 (2007: £1,110,000) has not been recognised as a liability in these interim
financial statements.
£'000 £'000 £'000 £'000 £'000 £'000
For the period ended 30 June
2007
At 1 January 9,585 3,628 (515) (1,124) 700 12,274
Shares issued during the 984 14,357 - - - 15,341
period
Profit for the period -
attributable to equity - - - 5,005 5,005
shareholders
Unrealised exchange movement - - - (197) - (197)
Transfer on vesting of own - - 462 - (462) -
shares
Current tax on shares vesting - - - - 278 278
Deferred tax on shares vesting - - - - (278) (278)
Value of employee services - - - - 583 583
Excess tax on share option - - - - 422 422
schemes
Dividends - - - - (2,218) (2,218)
Actuarial gains on pension - - - - 10,982 10,982
schemes
Tax on actuarial gains on - - - - (3,292) (3,292)
pension schemes
Movement in period 984 14,357 462 (197) 11,020 26,626
At 30 June 10,569 17,985 (53) (1,321) 11,720 38,900
Placing
On 23 April 2007 the company issued 4,795,000 new ordinary shares at 330 pence per share through a placing with institutional investors,
representing approximately 9.9% of the total issued share capital. Proceeds before commissions and expenses were £15.8m. The placing shares
rank pari passu in all respects with the existing issued shares
9 CHANGES IN SHAREHOLDERS' EQUITY (continued)
Share Share Treasury Translation Retained
Capital Premium Shares reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
For the year ended 31 December
2007
At 1 January 9,585 3,628 (515) (1,124) 700 12,274
Shares issued during the year 990 14,389 - - - 15,379
Profit for the year
attributable to equity - - - - 10,448 10,448
shareholders
Unrealised exchange movement - - - 2,926 - 2,926
Transfer on vesting of own - - 462 - (462) -
shares
Current tax on shares vesting - - - - 182 182
Deferred tax on shares vesting - - - - (182) (182)
Value of employee services - - - - 1,191 1,191
Excess tax on share option - - - - (279) (279)
schemes
Dividends - - - - (3,327) (3,327)
Actuarial gains on pension - - - - 8,782 8,782
schemes
Tax on actuarial gains on - - - - (3,087) (3,087)
pension schemes
Movement in period 990 14,389 462 2,926 13,266 32,033
At 31 December 10,575 18,017 (53) 1,802 13,966 44,307
Retained earnings as disclosed in the Balance Sheet page 11 represent the retained earnings and treasury shares balances above.
10 ACQUISITIONS
Acquisition of Tecnoforniture Srl
The group completed the purchase of 100% of Tecnoforniture Srl, a business based in Porto d'Ascoli, Italy, on 14 May 2008 for an initial
consideration of £4.3 million in cash. A further consideration of £4.3 million will be paid in equal instalments over the following two
years.
As the date of completion was close to the half year end the assets acquired are included at their carrying values which are deemed to
be the provisional fair values at the balance sheet date. The exercise to separately identify acquired intangible assets will be undertaken
in advance of the year-end.
The residual excess over the net assets acquired is recognised as goodwill in the financial statements.
Provisional
fair values
£'000
Property, plant and equipment 371
Inventories 1,757
Receivables 3,472
Payables (2,725)
Taxation - current (154)
Taxation - deferred 151
Cash and cash equivalents 1,653
Total 4,525
Net assets acquired 4,525
Goodwill 4,282
Consideration to be wholly satisfied in cash (including deferred 8,807
consideration of £4.3 million)
The outflow of cash and cash equivalents on the acquisition of Tecnoforniture is calculated as follows:
£'000
Cash consideration 4,279
Expenses and related costs 248
Cash acquired (1,653)
Total 2,874
Acquisition of CBS Rotary Power Motion
The group completed the purchase of 100% of CBS Rotary Power Motion, a business based in the Midlands in the UK, on 31 March 2008. The
consideration comprises an initial payment of £3.5 million in cash with further payments to follow on each anniversary of the completion
date for the next three years to 2011. The total consideration, pre-discounting, will be £6.1million.
The assets acquired are included at their carrying values which are deemed to be the provisional fair values at the balance sheet date.
The exercise to separately identify acquired intangible assets will be undertaken in advance of the year-end.
The residual excess over the net assets acquired is recognised as goodwill in the financial statements.
Provisional
fair values
£'000
Property, plant and equipment 112
Inventories 441
Receivables 1,497
Payables (1,584)
Taxation - current (143)
Taxation - deferred 1
Cash and cash equivalents 1,429
Total 1,753
Net assets acquired 1,753
Goodwill 4,325
Consideration to be wholly satisfied in cash (including deferred 6,078
consideration pre-discounting of £2.3 million)
The outflow of cash and cash equivalents on the acquisition of CBS is calculated as follows:
£'000
Cash consideration 3,518
Expenses and related costs 409
Cash acquired (1,429)
Total 2,498
During the period the group also acquired two small bolt-on businesses, one based in Breda in the Netherlands and the other based in the
Voralberg region of Austria. The combined sales of these two businesses in 2007 were EUR1.35 million.
The results of operations for the group, as if the above acquisitions had been made at the beginning of the year are as follows:
£'000
Revenue 246,987
Profit after tax 8,124
This information is not necessarily indicative of the results of operations that would have occurred had the acquisitions been made at
the beginning of the period presented or the future results of the combined operations.
A final review of the fair value adjustments in respect of the acquisitions of the Fin group, Rotate Ltd, the ZPV group and Mercia
Engineering Supplies Limited was completed during the first half of the year. As a result of this review adjustments have been made to
increase goodwill by £1,211,000.
Investment in associate
On 18 June the group acquired a 25% minority participation in CN Industrial Group srl, a group based in Romania , operating from five
branches in that country, and which had sales of EUR2.3m in 2007.
11 RELATED PARTY TRANSACTIONS
Other than the remuneration of executive and non-executive directors, there were no related party transactions during the period.
12 INTERIM REPORT
A copy of the interim report is available for inspection at the registered office of the company, Claverton Court, Claverton Road,
Wythenshawe, Manchester, M23 9NE and the offices of Citigate Dewe Rogerson Ltd, 3 London Wall Buildings, London Wall, London EC2M 5SY.
Current regulations permit the company not to send copies of its interim results to shareholders. Accordingly the 2008 interim results
published on 29 August 2008 will not be sent to shareholders. The 2008 interim results and other information about Brammer are available on
the company's website at www.brammer.biz.
13 INTERIM DIVIDEND
Relevant dates concerning the payment of the interim dividend are
Record date 10 October 2008
Payment date 7 November 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWRWRWSRWUAR
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