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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:4355X
Brammer PLC
07 April 2004
FOR IMMEDIATE RELEASE 7 April 2004
2003 PRELIMINARY RESULTS
LAYING FOUNDATIONS FOR A RETURN TO GROWTH
Brammer plc, the European services group, today announces preliminary results
for the year ended 31 December 2003.
Highlights
2003 2002 Change
Turnover #349m #338m +3%
Loss on ordinary activities after tax #(36.3)m #(3.1)m
Profit before goodwill, exceptional items and tax #7.0m #6.6m +6%
Movement in net debt #(16.9)m #19.6m
Net debt #(79.7)m #(62.8)m
Shareholders' equity #20.2m #62.4m
Earning per share
Basic (75.9)p (6.4)p
Diluted (75.9)p (6.4)p
Before amortisation of goodwill and 11.8p 10.9p +8%
exceptional items
Dividend per share 4.5p 4.5p +0%
* Strategy to exit Livingston business realised, allowing management to
now concentrate on growing Brammer Industrial Services ("BIS")
* The European market leading position of BIS continued to strengthen, with
BIS ending the year operating out of 232 locations, serving 103,000 customers
* Revenues in BIS increased by 10% to #262.5 million, whilst operating
profit increased by 5% to #11.8 million, primarily through acquisition
* BIS operating cash flow again exceeded operating profit by at least 60% -
continuing and improving the trend of previous years
David Dunn, chairman, said:
"BIS, with its pre-eminent distribution network throughout Europe, has a special
position within its European markets and Brammer intends to concentrate on the
many growth opportunities which are available to it.
Market conditions in continental Europe have been encouraging in the first
quarter of 2004, although the UK remains difficult. Within this environment the
outlook for the remainder of 2004 is cautiously optimistic. While growth in
the more mature product lines will remain a challenge the re-focused management
team has every opportunity to increase market share by capitalising on the wide
geographic spread which the business enjoys."
Enquiries: Brammer plc 020 7638 9571 (8.00am - 1.00pm)
0161 928 3363 (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
Anthony Kennaway
BRAMMER PLC
2003 PRELIMINARY RESULTS
Chairman's statement
Overview
In general terms we have seen a resilient and encouraging performance from
Brammer Industrial Services ("BIS") in 2003. However, the Livingston business
continued its decline and, notwithstanding the implementation of a major
reduction in its cost base, had a disappointing year.
Group turnover was #349.5 million representing an increase of 3% (2002 #338.0
million). Turnover at BIS increased by 10% to #262.5 million (2002 #238.8
million) of which 5% was accounted for by the acquisition of KNS in March 2003.
Livingston declined by 12% to #87.0 million (2002 #99.1 million). Group profit
before goodwill, exceptional items and tax was #7.0 million, an improvement of
#0.4 million on last year's figure primarily from the KNS acquisition. The loss
on ordinary activities after goodwill, exceptional items and tax was #36.3
million (2002 #3.1 million loss). Basic earnings per share were a loss of 75.9p
(2002 6.4p loss). Earnings per share before goodwill and exceptional items were
11.8p (2002 10.9p). Cash inflow from operating activities was excellent at
#29.4 million, albeit lower than last year's exceptional #51.6 million, which
benefited from the significant inventory reductions in Livingston in 2002.
After a #21.1 million outflow on acquisitions, mostly due to deferred
consideration, and #6.7 million of adverse exchange rates, net debt increased
from #62.8 million to #79.7 million in the period.
Restructuring
The re-structuring of Brammer continued in 2003. As reported in our circular to
shareholders issued on 23 December 2003, Brammer intends to focus on the
development and growth potential of the BIS distribution business. We have now
completed the sale of Livingston's calibration business to Air Liquide for a
price of #22.5 million in March 2004, subject to adjustments for debt and cash.
The value of the net assets of this business as at the completion date is still
subject to a completion accounts process. However, had the completion taken
place at the end of 2003, a profit on disposal of #1.3 million would have been
achieved.
We have also disposed of Livingston's loss making rental business in March 2004.
The sale price amounted to #12.6 million, subject to adjustments for debt and
cash, and we have impaired the value of the rental assets in the 2003 accounts
to the realisable value achieved in the sale. This has been recognised within
the exceptionalcharge and represents #23.7 million of the total exceptionals
cost in the year of #33.3 million. The remaining exceptionals related to the
programme of operational restructuring which continued in 2003 at BIS and
Livingston and fees incurred in the rental disposal.
Strategy
The fundamental change in our strategy has been to exit the Livingston business.
Last year, I reported that following an unprecedented decline in Livingston's
telecom and technology markets, the board's prioritywas to right size
Livingston to meet the reduced market demands. This exercise was ongoing
throughout 2003, against a background of declining rental turnover, and resulted
in further exceptional costs.
In the event that rental markets, in particular, do improve in the future there
would have been considerable demands for cash from this business which the board
believes would be detrimental to the core strategy of expanding the BIS
business. Consequently it was decided that an exit from Livingston was
desirable. The combined deals which have been completed represent an exit at an
overall price which is close to the net assets of the business (pre goodwill)
and will enable the group to focus on the larger and less volatile BIS business.
The disposals also provide the opportunity for Brammer to streamline its central
organisation by reducing management layers and their associated costs.
BIS has a special position within its European markets. With facilities
throughout Europeit has a pre-eminent distribution network and Brammer intends
to concentrate on the many growth opportunities which are available, in
particular, the expansion of its corporate account and Insite activities. We
believe there is considerable scope to increase profitability and market shares
in what are highly fragmented markets. Completion of the acquisitions of KNS in
Holland and THF in Germany during the year add to our ability to achieve this
growth.
Dividend
The board is recommending a final dividend of 3.0p (2002 3.0p) making a total
for the year of 4.5p (2002 4.5p). This level of dividend is covered 2.7 times
by the profit after tax but before goodwill and exceptional items. The final
dividend will be payable on 2 July 2004 to shareholders on the register at 4
June 2004.
Board changes
Since my last report, Robert Hough, the deputy chairman and senior independent
director, has retired from the board after ten years of service. We are
indebted to Robert for hissignificant contribution and wise counsel throughout
that time and wish him well in the future. Kevin Mellor has been appointed as
the senior independent director.
As announced earlier this month Jean-Marie Fink, a director of Brammer plc since
1994, stepped down from the board on 1 April 2004. He will leave the company
later in the year after ensuring an orderly handover of his responsibilities. We
would publicly like to acknowledge the considerable contribution that he has
made to thedevelopment of Brammer as a truly pan-European business.
People
The major changes to Brammer's businesses over the past two years have
challenged and tested our people. The board is grateful for their understanding
and commitment during thisperiod. We wish employees who have moved with the
Livingston business every success with their new owners. For those remaining
with the group, I believe we have worked our way through our difficulties and
look forward to an exciting and profitable future.
Outlook
Brammer's future will now be based solely upon exploiting the many opportunities
within BIS. Market conditions in continental Europe have been encouraging in
the first quarter of 2004, although the UK remains difficult. Within this
environment the outlook for the remainder of 2004 is cautiously optimistic.
While growth in the more mature product lines will remain a challenge the
re-focused management team has every opportunity to increase market share by
capitalising on the wide geographic spread which the business enjoys.
Chief executive's review
Overview
During 2003 we continued to strengthen the European market leading position of
Brammer Industrial Services. In Livingston's rental businesses we further
downsized the operations in the face of difficult market conditions, whilst in
calibration we held revenues steady. We restructured Livingston to facilitate
the successful sale of the calibration business and rental businesses
separately. The sale of each of these businesses was completed on 31 March
2004, allowing the group to concentrate on the development of Brammer Industrial
Services, with a strengthened balance sheet, and enhanced management focus.
Brammer Industrial Services
Brammer Industrial Services is the leading European supplier of technical
components and related services to the maintenance, repair and operations
markets ("MRO"). In 2003 we extended our leadership position in the supply of
bearings, power transmission products, seals, gearboxes and motors, fluid power
and value added services and support. We ended the year with 1,791 employees,
working in 232 locations, serving 103,000 customers.
Revenues in BIS increased by 10% to #262.5 million, whilst operating profit
before goodwill, exceptional items and interest increased by 5% to #11.8
million. Operating cash flow in BIS was #23.7 million, and capital employed
reduced by #4.4 million to #49.9 million as we managed a planned reduction in
working capital, mainly achieved through an improvement in inventory turns. In
each of the last two years operating cash flow has exceeded operating profit by
at least 60% - continuing and improving the trend of previous years. We expect
further benefits over the next several years as we improve inventory turns
through managing our inventory on a European basis.
Gross profit, at 31% or #80.5 million, was slightly higher in percentage terms
(2002 30%, #72.1 million) despite price pressure in the marketplace, and a
changed product mix, with newer lower margin products such as fluid power and
tools growing, and our more mature higher margin bearings product lines
declining in line with the overall market. We reduced headcount by 117 in
businesses we owned on 1 January 2003, whilst welcoming a total of 108 new staff
through acquisition, (KNS in the Netherlands and Belgium). In total, our
headcount decreased by 9 and revenues per head increased by 16% to #146,000
through productivity improvement.
In the UK revenues declined by 2%, following a downturn in the second half. We
decreased further the cost base with a headcount reduction of 59 to 739; 9
branches were closed or merged with adjacent branches. We reviewed our Insites
and decided to withdraw staff from 7 Insites where reduced volumes, due to the
customers' business downturn, could not sustain a physical presence on site. As
a result of these cost savings, operating profits improved. Several new
contracts were won including Heinz, Georgia Pacific and Yorkshire Water.
Capital employed reduced by #3.5 million (18%), due to improvements in inventory
efficiency and the provision by suppliers of a total of #1.8 million of service
stock.
In France revenues,at constant exchange rates, decreased by 1%. Intense
competitive pressure on margins coupled with investment in new products and
Insites resulted in a decline in operating profit, despite cost reduction
measures being taken to reduce headcount by 29. We increased our Insites from 5
to 11, with revenues growing by 33%, whilst fluid power sales grew by 49%.
In Germany revenues remained static whilst margin improvement and cost
reductions helped increase operating profit. Good progress wasmade on
corporate accounts, with revenues in this segment up 17%. Further headcount
reductions of 10 to 405 resulted in productivity improvement as measured by
sales per head of 10%.
In Spain revenues were unchanged and we continued to increaseour sales to the
MRO market (up 7%) reducing further our exposure to the more cyclical OEM
marketplace now down to 32% of our sales. We opened our first Insite, and our
experience suggests that there is good potential for further Insite development
in this territory. We appointed a new corporate accounts director to take
advantage of the significant opportunities available; corporate account revenues
grew by 27%.
We purchased the remaining 51% of KNS in the Netherlands on 1 April 2003. The
business continued to perform well. Whilst sales were down 1%, operating profit
rose. This platform should allow us to enjoy further significant growth in the
Benelux. We opened our first Insite in Belgium.
In our developing businesses we made good progress in Hungary where we combined
our existing business with that of Berdo and took a 49.78% stake in the combined
business, now called Berdo Brammer. Subsequently Berdo Brammer acquired the
bearings distribution business of another Hungarian company. Berdo Brammer now
has critical mass in the Hungarian market and this has resulted in a number of
our European corporate account customers transferring business to us. Our Czech
business Awexim grew revenues by 10%, whilst sales at Britannia, our Austrian
business dropped by 3%. We divested our 25% holding in Sociedade de Rolamentos
in Portugal where there was an insufficient match to our product range.
Livingston
There was no improvement in the markets served by Livingstonduring 2003. We
therefore continued to focus on improving operational efficiency, reducing the
cost base and producing cash. Having resolved to dispose of Livingston we
sought suitable opportunities and it became evident that the optimum approach
leading to highest shareholder value would be to dispose of the rental and
calibration businesses separately. Accordingly we reorganised the business to
facilitate this method of disposal and succeeded in completing these disposals
on 31 March 2004. The results of the Livingston businesses are shown under
"discontinued businesses" in the profit and loss account.
During the year we reduced significantly the value of our rental inventory by
selling surplus equipment. The net book value prior to impairment was #27.0
million at 31 December 2003 (2002 #35.6 million) and after impairment #4.5
million.
In our test equipment management services business the market declined during
the year. Revenues decreased by 39% to #16.2 million. In our computer products
business we attained a better balance of business across the various supplier
platforms and improved utilisation ratios through a combination of higher rental
rates and disposal of excess inventory. Nevertheless, revenues declined by 29%
to #29.7 million. To counteract these declines we cut costs further, reducing
headcount by 92 in the rental businesses.
In our calibration and measurement services business we continued to replace
reductions in demand from our telecom customers with new business from other
sectors. Revenues increased by 6%.
Overall in Livingston we returned to operational profit, before exceptional
items, in the second half of 2003.
Strategy
Our strategy is simple. We aim to extend our leadership position as the
pre-eminent European supplier of bearings, power transmission, and related
products to customers who use these products in the maintenance and repair of
their operations. We will focus on growing our sales in this narrowly defined
but extensive range of products, maintaining a high level of technical expertise
and the ability to add value to the product for our customers. We recognise
over one million part numbers and believe our target market in Western Europe is
around Euro10 billion. As market leader, though we have just 4% market share, we
are twice as big as the next biggest player and have unparalleled geographic
coverage. None of our competitors operate in more than four countries, whilst
we currently have a presence in 10 countries.
We seek to extend relationships with those major European customers who are
focusing on supplier reduction and want to establish a single source of supply
across Europe. We now have 8 pan-European contracts and sales to our corporate
accounts grew 24% in 2003. Contracted customers, whether on a national or
European basis, now account for over 20% of our revenues. The trend to single
European supply is increasing.
For our suppliers we representa single channel to market across the majority of
countries in Europe. We aim to build a pan-European position with one or two
strategic suppliers for each product group. By being the largest customer of
our key suppliers we are able to offer themgood revenue growth and an efficient
supply chain to the market and in return receive competitive pricing and
support.
Our management approach is to identify best practice and to roll this out at
every location. In 2003 we introduced an operational system which uses the same
key performance indicators at every location, thus ensuring homogeneity of
approach and the establishment of best practice. We achieved significant
efficiency improvements in 2003, productivity as measured by revenueper head
increasing by 10%. Continued development of best practice, and realisation of
European synergies in the areas of purchasing, warehousing and logistics will
afford further efficiency improvements.
Our business requires highly skilled people able to offer much more than simple
box shifting. They provide a solution to a customer problem offering not only
the component which meets the customer's need but also seeking opportunities to
cross sell from the remainder of our deepening product range. In order to
support this requirement for high levels of skill we have introduced web based
pan-European training in essential product knowledge. This will be accompanied
by further company wide training in cross selling and technical applications.
The productivity improvements, highlighted above, will continue through the
systematic development of co-ordinated "back office" logistics and systems
functions.
The future
The future of Brammer is now about implementing the strategy for BIS as outlined
above without the constraints of Livingston. We believe this will be of
considerable shareholder value. In 2003, during one of the most difficult
trading environments in recent years, we were able to improve operating profits
(before goodwill and exceptional items) and produce a high level of operating
cash. Our quest to extend our leadership position and to achieve synergy
benefits is yielding results. Many of our customers are seeking a single source
of supply across Europe and the actions taken in 2003 should ensure that we will
enhance our ability to offer a uniform service in every geography. To complete
our pan-European coverage we need to establish operations in Italy and
strengthen further our operationsin Eastern Europe. The excellent cash flow
generated by the business should continue for the foreseeable future. Several
initiatives are underway which will result in better control of inventory on a
European basis and will lead to further improvement in inventory turns.
Financial review
Overview
Against a background of generally poor market conditions many parts of our
business, particularly Brammer Industrial Services and the calibration and
management services businesses in Livingston, continued to produce encouraging
results. However further deterioration was evident in Livingston's rental
markets and results.
Post balance sheet event
On 31 March 2004 the group completed the disposal of the Livingston Calibration
business to Air Liquide for a consideration of Euro32 million subject to
adjustments for debt and cash.
Also on 31 March 2004 the group completed the disposal of Livingston rental for
initial cash consideration of #9.9 million (partially funded through a #3.0
million loan from Brammer repayable 13 months following completion), a deferred
cash payment of #3.0 million receivable 18 months after completion and a further
amount (up to #2.8 million) depending on the proceeds of sale of impaired
assets. Up to a further #0.2 million will be payable within three months of the
completion date subject to the value of net assets sold at the date of
completion.
In combination, the sale proceeds for the two businesses are projected to be
broadlyin line with net assets (pre goodwill) of the two businesses at
completion. However, the 2003 accounts include exceptional charges, as detailed
below, in respect of these disposals.
Turnover
Our turnover increased by 3% in the year of which continental Europe accounted
for a 5% increase (of which 4% points came from acquisitions) and the UK a 2%
fall. At constant exchange rates our turnover fell by 9%, a 3% point increase
in BIS offset by a 12% point decline in Livingston.
Profit
The result for the year was a loss on ordinary activities after tax, and after
exceptional charges of #33.3 million (2002 #8.7 million), of #36.3 million (2002
#3.1 million loss). Group profit before goodwill, exceptional items and after
interest was up 6% in the year at #7.0 million (2002 #6.6 million).
Exceptional charges
This year's accounts include an exceptional charge (excluding tax) of #33.3
million as shown below
#'m
Restructuring
Brammer Industrial Services 2.2
Livingston 5.1
7.3
Livingston asset write down 23.7
Disposal costs 2.3
Total exceptional 33.3
The #23.7 million Livingston rental asset write down reflects the impairment of
the rentalassets in the Livingston businesses.
The restructuring of #7.3 million results from action, reported at the half
year, to re-size overheads to match reducing revenue levels.
Goodwill
In 2003 we changed our accounting policy to denominate goodwill as a currency
based asset and this increased goodwill by #1.6 million. This also resulted in
2002 profits being restated (up #0.6 million to #6.6 million) for prior year
comparison.
Goodwill in the balance sheet stands at #49.6 millionat the end of the year
(2002 restated #45.5 million). In 2003 goodwill increased by #3.3 million in
respect of acquisitions, #3.7 million due to exchange (in line with the
accounting policy change) and reduced by #2.9 million of amortisation.
Had the sale of the Livingston business happened at the year end, goodwill
(associated entirely with the Livingston Calibration business) would have been
reduced by #13.5 million.
BIS acquisitions and disposals
On 1 April 2003 the group announced the acquisition of the remaining 51%
interest in KNS Aandrijftechniek BV ("KNS"), a Dutch specialist industrial
services business. The consideration was payable in two instalments on 2
January 2004 (Euro3,000,000) and 2 July 2004 (Euro2,801,635). The company was
accounted for as an associate in the period to 31 March 2003 and as a 100% owned
subsidiary from 1 April 2003. The results of KNS are shown separately under
"acquired" in the profit and loss account.
With effect from 31 May 2003 the group disposed of its 25% interest in Sociedade
de Rolamentos, SDR SA, a Portuguese specialist industrial services business, for
a cash consideration of Euro542,000. Rolamentos was accounted for as an associate
in the group's results up to the date of disposal.
On 1 April 2003 the group disposed of its interest in THF HU Kft, a Hungarian
specialist industrial services business, to Berdo Brammer and acquired a 49.78%
interest in Berdo Brammer, the transactions having no cash effect. Berdo
Brammer is accounted for as an associate in the group's results.
The results and profits on sale of Rolamentos and THF HU Kft are not material in
relation to the group as a whole and therefore have not been separately
disclosed.
Trading during the year
Group turnover increased by 3% during the year. Group profit before goodwill,
exceptional items, interest and tax ("underlying profit") was #10.5 million
(2002 #10.8 million), of which #4.4 million was delivered in the first half and
#6.1 million in the second half. The restructuring (expensed as exceptional
charges in 2002 and 2003) enabled us to reduce headcount by 9% and employee
costs by 3% (net of pay increases, pension contribution and national insurance
increases).
Brammer Industrial Livingston
Services
2003 First Second Full First Second Full
half half year half half year
#'m #'m #'m #'m #'m #'m
Turnover 133.9 128.6 262.5 44.9 42.1 87.0
Underlying profit 6.1 5.7 11.8 (1.7) 0.4 (1.3)
2002
Turnover 119.3 119.5 238.8 52.4 46.7 99.1
Underlying profit 5.5 5.7 11.2 1.4 (1.8) (0.4)
Brammer Industrial Services' turnover was up 10% on 2002, 20% growth in Europe
(half of which is attributable to the inclusion of KNS as a 100% owned
subsidiary, the remainder attributable to movements in exchange) being offset by
a decline of 2% in the UK. Underlying profit increased by 5% from #11.2 million
in 2002 to #11.8 million in 2003, the inclusion of KNS accounting for #0.4
million (3 percentage points) of the increase.
Livingston's turnover was down 12% on 2002, all of the fall being in Livingston
rental, rental turnover being down 24%. Whilst Livingston's trading loss
increased from #0.4 million in 2002 to #1.3 million in 2003, the second half
2003 showed a #2.1 million improvement on the first half at #0.4 million profit
(first half 2003 #1.7 million loss).
Interest
The interest charge for the year of #3.5 million (2002 #4.1 million) represents
an effective interest rate on average net borrowings of 4.7% (2002 5.2%). Our
profit before goodwill and exceptional items cover of interestis 3.0x compared
to 2.6x in 2002.
Tax
The tax charge for the year is #7.1 million which includes a #5.7 million write
off of deferred and other tax assets in the Livingston division.
Cash flow
Net debt increased by #16.9 million from #62.8 million to #79.7 million
2003 2002
#'m #'m
Net cash inflow from operating activities 29.4 51.6
Net capital expenditure (purchases net of disposals) (8.9) (13.6)
Operational cash generation 20.5 38.0
Deferred consideration (20.7) (2.9)
Exchange (6.7) (5.1)
Interest, tax, dividends and other (10.0) (10.4)
Movement in net debt (16.9) 19.6
At constant (2002) exchange rates net debt increased by #10.3 million, after
including #2.9 million of net debt acquired with KNS, from #62.8 million in 2002
to #73.0 million at the end of 2003. Net cash inflow from operating activities
of #29.4 million was reduced by #19.0 million of rental assets purchases (2002
#22.7 million) and the settlement of #20.7 million of deferred consideration,
primarily for THF and Climats and Sapratin, paid in the second half of 2003.
Average net borrowings in 2003 were #74.6 million compared to #78.9 million in
2002.
Treasury
In December 2003 the covenants on the group's main banking facility were waived
in favour of fixed and floating charges over the shares and certain specified
Brammer Industrial Services' assets to facilitate the disposal of the Livingston
businesses. The cash realised onthe disposal of Livingston will be used to
reduce our net borrowings.
The group does not enter into speculative currency transactions but from time to
time will use derivative financial instruments to hedge particular transactions
back into operating companies' domestic currencies.
The companies in the group mostly trade within their domestic markets in their
local currency. Where companies trade into export markets, this is generally at
the behest of domestic customers who trade globally. Group companies account in
their local currency principally either sterling or euros, and at 31 December
2003 #16.8 million (17%) of the group's tangible operating assets were held in
sterling and #83.1 million (83%) in euros.
Net operating assets and financing by currency at 31 December 2003 were as
illustrated below
Currency Net operating assets Financing Net assets employed
#'m #'m #'m
Sterling 16.8 (0.4) 16.4
Euro 83.1 (79.3) 3.8
99.9 (79.7) 20.2
Taxation 4.5 (4.5) 0.0
Dividends 1.4 (1.4) 0.0
105.8 (85.6) 20.2
In early 2003 the board reviewed the group's hedging policy for euro denominated
assets and liabilities and changed the policy to denominate goodwill as a
currency asset and to take only a partial hedge against currency net assets.
This has resulted in a prior year adjustment which increased reserves by #1.6
million as at 31 December 2002 and has the effect of improving loss before tax
for the year ended 31 December 2002 by #0.6 million.
The consolidated net trading profit before goodwill, exceptional items and
interest covers the interest payable 3.0x and net worth is #20.2 million (2002
#62.4 million).
Thedirectors consider the group to have adequate resources to continue
operations for the foreseeable future and therefore continue to use the going
concern basis in the preparation of the financial statements.
We will continue to focus on generating cash to enable us to expand Brammer
Industrial Services in Europe, organically and by acquisition.
Earnings per share
Earnings per share before goodwill amortisation and exceptional items rose from
10.9p in 2002 (restated) to 11.8p in 2003.Basic earnings per share were a loss
of 75.9p (2002 6.4p loss).
Brammer
Preliminary results announcement
Consolidated profit and loss account
for the year ended 31 December 2003
2003 2003 2002 2002
Restated Restated
#'000 #'000 #'000 #'000
Turnover
Existing businesses 249,261 238,845
Acquired businesses 13,251 0
Continuing businesses 262,512 238,845
Discontinued businesses 86,960 99,146
Total turnover 349,472 337,991
Cost of sales (including exceptional items) (262,306) (230,306)
Gross profit 87,166 107,685
Net operating expenses (including (113,065) (108,667)
exceptional items)
Operating profit / (loss)
Existing businesses 4,403 5,786
Acquired businesses 830 0
Continuing businesses 5,233 5,786
Discontinued businesses (31,132) (6,768)
Total operating loss after (25,899) (982)
exceptional items
Share ofassociates' operating profit 149 609
Amortisation of goodwill in associates (10) (62)
Loss on ordinary activities (25,760) (435)
before interest
Net interest payable (3,471) (4,147)
Profit on ordinary activities 10,480 10,770
before goodwill, exceptional
items and interest
Interest (3,471) (4,147)
7,009 6,623
Goodwill (2,960) (2,505)
Exceptional items (33,280) (8,700)
Loss on ordinary activities (29,231) (4,582)
before tax
Tax (charge) / credit on loss on (7,086) 1,503
ordinary activities
Loss on ordinary activities after (36,317) (3,079)
tax
Dividends (2,117) (2,154)
Retained loss for the financial (38,434) (5,233)
year
Earnings per share
Basic (75.9) p (6.4) p
Diluted (75.9) p (6.4) p
Basic before goodwill 11.8 p 10.9 p
amortisation and exceptional
items
Dividend per share 4.5 p 4.5 p
Brammer
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2003
2003 2002
Restated
#'000 #'000
Loss for the financial year (36,317) (3,079)
Exchange differences on foreign currency net 7 958
investments
Total recognised losses for the year (36,310) (2,121)
Prior year adjustment 1,579 0
Total losses recognised since last annual report (34,731) (2,121)
Consolidated balance sheet
at 31 December 2003
2003 2002
Restated
#'000 #'000
Fixed assets
Intangible assets 49,569 45,500
Tangible assets 23,783 55,439
Investment in associates 478 2,008
73,830 102,947
Current assets
Stock 51,018 46,073
Debtors 70,961 73,788
Cash and deposits 12,740 11,869
134,719 131,730
Creditors - due within one year (118,465) (101,548)
Net current assets 16,254 30,182
Total assets less current liabilities 90,084 133,129
Creditors - due after more than one year (64,224) (67,899)
Provisions for liabilities and charges (5,707) (2,855)
Net assets employed 20,153 62,375
Capital and reserves
Calledup share capital 9,573 9,573
Share premium account 3,552 3,552
Shares to be issued 0 3,217
Profit and loss account 7,028 46,033
Shareholders' equity 20,153 62,375
Brammer
Consolidated cash flow statement
for the year ended 31 December 2003
2003 2002
Restated
#'000 #'000
Loss on ordinary activities before interest (25,760) (435)
Accrued element of exceptional items 2,474 2,855
Depreciation and impairment of tangible fixed assets 45,450 39,532
Amortisation of goodwill 2,960 2,505
Charge in respect of own shares 193 0
25,317 44,457
Associates (149) (609)
(Profit) / loss on sale of fixed assets (1,422) 1,331
23,746 45,179
Movement in working capital 5,631 6,372
Net cash inflow from operating activities 29,377 51,551
Returns on investments and servicing of finance
Interest received 126 214
Interest paid (3,479) (5,130)
(3,353) (4,916)
Tax (paid) / received (567) 2,382
Capital expenditure
Purchase of tangible fixed assets (23,758) (30,332)
Sale of tangible fixed assets 14,848 16,787
(8,910) (13,545)
Acquisitions and disposals
Purchase of subsidiaries and businesses (59) (828)
Net cash acquired 213 191
154 (637)
Investment in associated undertaking (520) 311
Deferred consideration paid (20,729) (2,879)
(21,095) (3,205)
Disposal of interest in associated undertaking 377 0
Net cash sold (37) 0
(20,755) (3,205)
Equity dividends paid (2,117) (6,749)
Net cash (outflow) / inflow before management of liquid resources (6,325) 25,518
and financing
Management of liquid resources
Deposits (2,091) (559)
Financing
New loans taken out / (repayment of loans) 5,607 (15,289)
Capital element of finance leases (158) (140)
Purchase of own shares (771) 0
4,678 (15,429)
(Decrease) / increase in cash (3,738) 9,530
Consolidated cash flow statement
for the year ended 31 December 2003 (continued)
2003 2002
Restated
#'000 #'000
(Decrease) / increase in cash (3,738) 9,530
Cash movement from (decrease) / increase in debt and (3,358) 15,988
lease financing and liquid resources
(7,096) 25,518
New finance leases (87) 0
Loans acquired (3,074) (835)
Exchange movements (6,712) (5,112)
Movement in net debt (16,969) 19,571
Net debt at 31 December 2002 (62,750) (82,321)
Net debt at 31 December 2003 (79,719) (62,750)
Notes to the accounts
1. Cost ofsales, gross profit, selling, logistics and administrative expenses
2003 2003 2003 2003 2003
Continuing businesses Discontinued
Existing Acquired Total businesses Total
#'000 #'000 #'000 #'000 #'000
Turnover 249,251 13,251 262,502 86,970 349,472
Cost of sales (173,569) (8,461) (182,030) (55,098) (237,128)
Exceptional items 0 0 0 (25,178)(25,178)
Total cost of sales (173,569) (8,461) (182,030) (80,276) (262,306)
Gross profit 75,682 4,790 80,472 6,694 87,166
Selling and logistics (51,521) (3,679) (55,200) (12,864) (68,064)
expenses
Exceptional items 0 0 0 (1,147) (1,147)
Total selling and (51,521) (3,679) (55,200) (14,011) (69,211)
logistics expenses
Administrative expenses (15,757) (1) (15,758) (18,191) (33,949)
before amortisation of
goodwill
Exceptional items (2,048) (187) (2,235) (4,720) (6,955)
(17,805) (188) (17,993) (22,911) (40,904)
Amortisation of goodwill (1,953) (93) (2,046) (904) (2,950)
Total administrative (19,758) (281) (20,039) (23,815) (43,854)
expenses
Net operating expenses (71,279) (3,960) (75,239) (37,826) (113,065)
Operating profit / (loss) 4,403 830 5,233 (31,132) (25,899)
2002 2002 2002
Continuing Discontinued
businesses businesses Total
Restated Restated Restated
#'000 #'000 #'000
Turnover 238,845 99,146 337,991
Cost of sales (166,377) (60,391) (226,768)
Exceptional items (337) (3,201) (3,538)
Total cost of sales (166,714) (63,592) (230,306)
Gross profit 72,131 35,554 107,685
Selling and logistics expenses (47,167) (17,608) (64,775)
Exceptional items (1,247) (1,831) (3,078)
Total selling and logistics expenses (48,414) (19,439) (67,853)
Administrative expenses before amortisation of (15,715) (20,572) (36,287)
goodwill
Exceptional items (461) (1,623) (2,084)
(16,176) (22,195) (38,371)
Amortisation of goodwill (1,755) (688) (2,443)
Total administrative expenses (17,931) (22,883) (40,814)
Net operating expenses (66,345) (42,322) (108,667)
Operating profit / (loss) 5,786 (6,768) (982)
2. Segmental analysis
Brammer
Industrial Services Livingston Total
2003 2002 2003 2002 2003 2002
Restated Restated Restated
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 262,512 238,845 86,960 99,146 349,472 337,991
Profit / (loss) before 11,806 11,199 (1,326) (429) 10,480 10,770
goodwill, exceptional items
and interest
Exceptional items (2,235) (2,045) (31,045) (6,655) (33,280) (8,700)
Goodwill (2,056) (1,806) (904) (699) (2,960) (2,505)
Profit / (loss) before 7,515 7,348 (33,275) (7,783) (25,760) (435)
interest
Interest (3,471) (4,147)
Loss before tax (29,231) (4,582)
Net operating assets excluding 49,860 54,274 13,520 43,047 63,380 97,321
goodwill and deferred
consideration
Capitalised goodwill 36,065 32,884 13,504 12,616 49,569 45,500
Deferred consideration (7,166) (15,444) 0 (2,983) (7,166) (18,427)
Net operating assets 78,759 71,714 27,024 52,680 105,783 124,394
Net debt (79,719) (62,750)
Dividends (1,436) (1,436)
Net tax (4,475) 2,167
Net assets employed 20,153 62,375
3. Exceptional items
The items treated as exceptional items (#33,280,000) relate to the restructuring
of the Brammer Industrial Servicesand Livingston divisions (#7,296,000), the
writing down of the carrying value of the net assets of the Livingston Rental
Businesses to the anticipated proceeds of the disposal of the business
(#23,747,000) and expenses associated with the disposal of the Livingston Rental
Businesses (#2,237,000).
In addition the tax charge for the year of #7,086,000 includes an amount of
#5,709,000 being the write off of deferred and other tax assets in the
Livingston division.
4. Post balance sheet event
On 19 December 2003 the group announced that it had reached agreement to sell
its continental European calibration and equipment management services
businesses (the "Livingston Calibration Business") to Air Liquide SA for a cash
consideration of Euro32 million (#22.5 million), calculated on a debt and cash-free
basis, and subject to adjustment to reflect the amount of cash and debt in the
business at completion. The sale completed on 31 March 2004.
On 15 March 2004 the group announced that it had reached agreement to sell its
equipment rental and UK calibration businesses (the "Livingston Rental
Business") to De Facto 1059 Limited ("De Facto"), a buy-out vehicle owned, inter
alia, by Mel Porter (a former director), for a contracted consideration of
#12,375,000. #6,875,000 will be paid on completion, #3,000,000 will be payable
in April 2005 and the balance of #2,500,000 payable in September 2005. Up to a
further #214,000 will be payable within three months of the completion date
subject to the value of net assets sold at the date of completion. In the event
that the net assets sold at completion is lower than anticipated then there will
be an equivalent reduction in the amount payable by the purchaser. Further
amounts will be payable in the future conditional upon the sale of certain
rental inventory by De Facto, up to a maximum of #2,800,000. The sale completed
on 31 March 2004.
Following completion the group retained a 24.9% stake in De Facto which De Facto
will have the right to redeem at a price of between #500,000 and #2,000,000
depending upon the date of the actual repayment of the #2,500,000 deferred cash
payment.
5. Preliminary announcement
A copy of the preliminary announcement is available for inspection at the
registered office of the company, Station House, Stamford New Road, Altrincham,
Cheshire, WA14 1EP and the offices of Citigate Dewe Rogerson Ltd, 3 London Wall
Buildings, London Wall, London, EC2M 5SY. It will also be available on the
company's web site, www.brammer.plc.uk, from 8 April 2004.
6. Final dividend
Relevant dates concerning the payment of the final dividend are
Annual general meeting 25 May 2004
Record date 4 June 2004
Payment date 2 July 2004
7. Statutory accounts
This preliminary announcement is not the statutory accounts. The statutory
accounts have not yet been delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ILFSDSTIRIIS
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