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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 | |
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0.00 | 0.00% | 164.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:4647C Brammer PLC 01 September 2004 FOR IMMEDIATE RELEASE 1 September 2004 2004 INTERIM RESULTS A SOUND, GROWING & PROFITABLE BUSINESS Brammer plc, the European industrial services group, today announces its results for the six months ending 30 June 2004. FINANCIAL SUMMARY 2004 2003 #m #m Change Revised Turnover 156.2 178.8 -13% Profit / (loss) on ordinary activities before tax 0.8 (4.0) +121% Profit before goodwill, exceptional items and tax 5.2 2.6 +101% Movement in net debt 22.1 (4.5) Net debt (57.7) (67.3) Equity shareholders' funds 17.5 55.3 pence pence Earnings per share Basic (1.7) (6.0) +72% Diluted (1.7) (6.0) +72% Before amortisation of goodwill and exceptional items 7.5 4.4 +70% Dividend per share 1.5 1.5 +0% * Disposal of Livingston businesses and re-organisation of management structure completed allowing management to focus on development and growth of the BIS distribution business * First half BIS revenues grew 2% overall with growth in continental Europe, particularly France, Germany and the Netherlands, offsetting a weaker UK * UK trading responded to management action during first quarter, with sales improving steadily to return to modest year on year growth in sales per working day by July * Positive operating cash flow and planned reduction in working capital contributed to lower net debt of #57.7 million. Operating cash flow is expected to exceed operating profit for the foreseeable future David Dunn, chairman, said: "It is good to be able to report real progress in Brammer's fortunes. Brammer has emerged from a difficult period with a sound, growing and profitable business. As the pre-eminent pan-European supplier of essential components and services to industry, it is management's priority to develop the growth potential that this positioning bestows upon the group. "Trading since the end of June has been satisfactory with European markets relatively stable and continued growth in corporate account sales. In the UK our business improved steadily throughout the first half returning to growth, as measured by sales per working day, in July. The outlook for the second half is therefore positive and in line with expectations." 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 2004 PRELIMINARY RESULTS CHAIRMAN'S STATEMENT The first six months It is good to be able to report real progress in Brammer's fortunes in the first six months of the year. Having completed the disposal of the Livingston businesses our clear focus can now be upon the development and growth of the Brammer distribution business. Brammer's profit on ordinary activities before tax for the first half of this year was #0.8 million which compares to a #4.0 million loss in the first half of 2003. The profit before goodwill and exceptional items for the first half of 2004, including operations now discontinued, was #5.2 million, double the #2.6 million achieved in the first half of 2003. The chief executive's operating review provides a more detailed description of trading but, in summary, the continuing business (Brammer Industrial Services and central activities) contributed #5.1 million (2003 #5.3 million) on turnover up 2% to #136.9 million, while the discontinued Livingston operation contributed #1.6 million (2003 #0.9 million loss). There were exceptional costs of #3.2 million, largely related to the Livingston disposal, in addition to interest of #1.6 million (2003 #1.8 million) and goodwill amortisation of #1.2 million (2003 #1.4 million). The overall profit before tax was #0.8 million (2003 #4.0 million loss). Basic earnings per share were a loss of 1.7p (2003 6.0p loss). Adjusted earnings per share (before goodwill amortisation and exceptional items) were 7.5p (2003 4.4p). Net debt fell from #79.7 million at 31 December 2003 to #57.7 million. Importantly, Brammer has emerged from a very difficult three year period with a sound, growing and profitable business in which all of our stakeholders can look to the future with confidence. Our strategy of concentrating on our distribution business was laid out to shareholders in the 2003 annual report. We stated at that time that we would, in particular, concentrate on expanding our corporate account business in Europe and we have been encouraged by the successes we have achieved to date with a number of large and important customers. Clearly the first six months have seen a significant amount of reorganisation. Completion of the disposals has been complex and time consuming. The reorganisation of the management structure to achieve a clearer overall focus and shorter reporting lines has been, and will continue to be, a priority. As ever the management of such organisational change cannot be underestimated. Two executive directors, Jean-Marie Fink and David Hollywood, both retired during this period and we are indebted to both of them for their important contributions to the board and the growth of Brammer distribution. We welcomed Terry Garthwaite in June as a non-executive director. Terry has substantial PLC experience as a finance director and we look forward to his contribution in the future. The future Brammer has become established as the pre-eminent pan-European supplier of essential components and services to industry. Our priority is to develop the potential and the considerable growth opportunity this positioning bestows on the group. Whilst we continue to win new corporate accounts it is essential that we work hard to improve the management capability, logistics and systems to underpin and support our customers' needs. Investments of time and money will be required to achieve these improvements. Our chief executive, Ian Fraser, has now established his new senior management team with the objective of achieving a greater integration and single sense of overall purpose rather than simply managing operations on a purely geographic and local basis. This is an important requirement if we, and our customers, are to benefit from the powerful synergies that our pan-European business model offers. Current trading and dividend Trading since the end of June has been satisfactory. European markets have been relatively stable and our businesses have benefited from the growth in corporate account sales. In the UK our business improved steadily throughout the first half returning to growth, as measured by sales per working day, in July. The outlook for the second half is therefore positive and in line with expectations. The board has declared an unchanged interim dividend of 1.5p which will be paid on the 4 November 2004 to shareholders on the register at the close of business on 8 October 2004. David Dunn 1 September 2004 CHIEF EXECUTIVE'S REVIEW Overview In the first half of 2004 we continued to strengthen the European market leading position of Brammer Industrial Services ("BIS"). We also completed the disposal of Livingston, selling the European calibration business to Air Liquide and the rental businesses to the previous management. Free of the distractions of the past, we are now able to concentrate on the exciting opportunities within BIS, with lower borrowings and enhanced management focus. Brammer Industrial Services BIS is the leading European supplier of technical components and related services to the maintenance, repair and operations ("MRO") markets. In the first half revenues increased by 2% to #136.9 million, whilst operating profit before goodwill, exceptional items and interest decreased by 3% to #5.1 million. Profits improved on the continent but declined in the UK where, after a poor first quarter, we are now seeing continuing improvement. Cash inflow from operating activities in BIS was #3.8 million and net operating assets employed reduced by #11.2 million to #52.4 million as we continued our planned reduction in working capital, mainly achieved through an improvement in inventory turns. In 2002 and 2003 operating cash flow exceeded operating profit by more than 60% - continuing and improving the trend of the previous three years. We expect to continue to produce more operating cash flow than operating profit in 2004 and indeed over the next several years as we improve inventory turns through managing our inventory on a European basis. Operating margins remain unchanged in percentage terms despite price pressure in the marketplace. At the end of the first half headcount in BIS was 1,778, which was 44 lower than at the same time last year. Revenues per head increased by 9% to #77,000 for the half year, following a 14% improvement last year. In the UK, although revenues declined by 7% as weaker market conditions continued into the first half, management actions in the first quarter stabilised the business with like-for-like turnover increasing steadily through the remainder of the first half. By July we had returned to modest year on year growth as measured in sales per day. We worked hard on the cost base; six branches were closed or merged with adjacent branches. Capital employed reduced by #5.1 million (25%), due to improvements in inventory efficiency and the provision by suppliers of a total of #2 million of service stock. We reduced the number of Insites by exiting those which did not meet our profit targets and carried out actions to improve the profitability of the remaining Insites. As a result the total contribution from Insites increased by 11%. Several new contracts were won with customers such as Yorkshire Water, Severn Trent Water and Lafarge. In France revenues increased by 5% as the investment made last year in new product introduction and Insites began to take effect. This growth, together with the effect of last year's cost reduction measures, helped increase operating profit by 24%. We increased our Insites from 10 to 13 and revenues through Insites increased by 26% compared with the first half of last year. In Germany revenues grew by 5%, whilst margin improvement and the effect of earlier cost reductions helped increase operating profit by 55% compared with last year. Good progress was made on corporate accounts, with revenues in this segment up 16%. We won a significant pneumatics contract with Volkswagen across six locations with expected annual revenues approaching #2 million. Further headcount reductions of 5 to 388 resulted in productivity improvement as measured by sales per head of 6%. In Spain revenues grew 2%. We continued to increase our sales to the MRO market (up 8%) reducing further our exposure to the more cyclical original equipment manufacturers ("OEM") marketplace (down 8%). We have now shed the low margin OEM business as planned and do not expect further decline. In the Netherlands revenues were up 5%, with good growth in MRO sales contributing to a 3 percentage point improvement in the gross profit margin. Several new contracts were won including Smurfit and Kamp's bakery. A new branch was opened at Spankeren. Strategy We continued to implement our clear strategy Growth * We seek to build customer relationships with those major European groups who are focusing on supplier rationalisation and want to establish a single source of supply across Europe. The trend of customers to require a single European supply is increasing. We are in a strong competitive position to benefit from this trend. Revenues through our contracted European accounts grew 18%. In addition the two new contracts with Smurfit and GKN will bring additional revenues, when fully implemented, of around Euro11 million per annum. We have significantly strengthened our corporate account business development team. * We have now built teams in each country which will seek Insite and added value opportunities at our customers. * We continue to refine our marketing approach to present as the national and European expert in each of the most attractive market segments in our industry. * We are constantly vigilant to identify attractive acquisition candidates which will bolt on to our existing operations. Costs * We have appointed a European purchasing director whose task will be to build strong relationships with our suppliers. We are concentrating our purchases with a smaller number of suppliers, thereby gaining product price improvements as well as enhanced supplier marketing support in the field. * We have embarked on a programme to identify and roll out best practice in all of our operations, continuing our quest to improve productivity and reduce costs as a percentage of revenues. Capability * We launched an on-line learning programme to all of our people in 9 countries. Already over 50% of our staff have started this programme, which we expect to help significantly improve our technical and selling skills. * We continue to evolve our system of Key Performance Indicators which will lead to best practices being introduced in each branch, and a more homogeneous level of service in each territory, with resultant productivity improvements. * Our corporate account toolkit is now being used in all territories to win new business and add value to existing customer relationships. * We have appointed a European IT director whose task will be to develop an integrated IT strategy across all of our operations. The future We continue to have a strong presence within Europe on which to build and can anticipate gains in market share in an otherwise fragmented market place. Efforts to extend our leadership position and to achieve synergy benefits are already beginning to bring benefits. The excellent cash flow generated by the business should continue for the foreseeable future. Several initiatives are underway which will result in the utilising of inventory on a pan-European basis. We can be confident that operating cash flow will exceed profit for some time to come. Ian Fraser 1 September 2004 Brammer CONSOLIDATED PROFIT AND LOSS ACCOUNT the unaudited group results for the six months Six months to Six months to Full year 30 June 2004 30 June 2003 2003 #'000 #'000 #'000 #'000 #'000 #'000 Turnover Continuing businesses 136,876 133,873 262,512 Discontinued businesses 19,305 44,931 86,960 Total turnover 156,181 178,804 349,472 Cost of sales (107,703) (121,017) (237,128) Exceptional items - (1,958) (25,178) Total cost of sales (107,703) (122,975) (262,306) Gross profit 48,478 55,829 87,166 Selling and logistics expenses (27,812) (34,623) (68,064) Exceptional items - (1,032) (1,147) Total selling and logistics expenses (27,812) (35,655) (69,211) Administrative expenses before (13,865) (18,955) (33,949) amortisation of goodwill Exceptional items (274) (2,215) (6,955) (14,139) (21,170) (40,904) Amortisation of goodwill (1,188) (1,365) (2,950) Total administrative expenses (15,327) (22,535) (43,854) Operating profit / (loss) Continuing businesses 4,021 4,147 5,233 Discontinued businesses 1,318 (6,508) (31,132) Total operating profit / (loss) after 5,339 (2,361) (25,899) exceptional items Loss on disposal of discontinued (2,901) - - operations Share of associates' operating (loss) (35) 174 149 / profit Amortisation of goodwill in (1) (17) (10) associates Profit / (loss) on ordinary 2,402 (2,204) (25,760) activities before interest Net interest (1,556) (1,787) (3,471) Profit / (loss) before goodwill, exceptional items and interest Continuing businesses 5,128 5,306 9,663 Discontinued businesses 1,638 (923) 817 6,766 4,383 10,480 Interest (1,556) (1,787) (3,471) Profit before goodwill and 5,210 2,596 7,009 exceptional items Goodwill (1,189) (1,382) (2,960) Exceptional items (3,175) (5,205) (33,280) Profit / (loss) on ordinary 846 (3,991) (29,231) activities before tax Tax (1,636) 1,143 (7,086) Loss on ordinary activities after tax (790) (2,848) (36,317) Dividends (718) (716) (2,117) Retained loss for the period (1,508) (3,564) (38,434) Earnings per share Basic (1.7)p (6.0)p (75.9)p Diluted (1.7)p (6.0)p (75.9)p Basic before goodwill, amortisation 7.5p 4.4p 11.8p and exceptional items Dividend per share 1.5p 1.5p 4.5p Brammer CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES the unaudited group statement for the six months Six months to Six months to Full year 30 June 2004 30 June 2003 2003 Revised Revised #'000 #'000 #'000 Loss for the period (790) (2,848) (36,317) Exchange differences on foreign currency net investments (1,245) 454 7 Total recognised gains and losses for the period (2,035) (2,394) (36,310) Brammer CONSOLIDATED BALANCE SHEET the unaudited group financial position as at 30 June 2004 30 June 30 June 31 December 2004 2003 2003 Revised #'000 #'000 #'000 Fixed assets Intangible assets 33,346 49,701 49,569 Tangible assets Rental inventory - 30,827 4,547 Other fixed assets 11,629 19,966 19,236 Investments Associates 461 97 478 45,436 100,591 73,830 Current assets Stock 45,109 50,550 51,018 Debtors 56,105 84,434 70,961 Cash and deposits 9,241 7,879 12,740 110,455 142,863 134,719 Creditors - due within one year (82,371) (110,367) (118,465) Net current assets 28,084 32,496 16,254 Total assets less current liabilities 73,520 133,087 90,084 Creditors - due after more than one year (52,879) (74,294) (64,224) Provisions for liabilities and charges (3,142) (3,452) (5,707) Net assets employed 17,499 55,341 20,153 Capital and reserves Called up share capital 9,573 9,573 9,573 Share premium account 3,552 3,552 3,552 Profit and loss account 4,374 42,216 7,028 Equity shareholders' funds 17,499 55,341 20,153 Brammer CONSOLIDATED CASH FLOW STATEMENT the unaudited group cash flow for the six months Six months to Six months to Full year 30 June 2004 30 June 2003 2003 Revised Revised #'000 #'000 #'000 Profit / (loss) on ordinary activities before interest 2,402 (2,204) (25,760) Accrued element of exceptional items - 3,018 2,474 Depreciation and impairment of tangible fixed assets 1,462 13,887 45,450 Amortisation of goodwill 1,189 1,382 2,960 Amortisation of owned shares 128 64 193 5,181 16,147 25,317 Share of associate's operating profit 35 (174) (149) Loss on sale of investment 2,901 - - Loss / (profit) on sale of fixed assets 1,040 170 (1,422) 9,157 16,143 23,746 Movement in working capital 635 (3,768) 5,631 Net cash inflow from operating activities 9,792 12,375 29,377 Returns on investments and servicing of finance Interest received 92 57 126 Interest paid (1,768) (1,760) (3,479) (1,676) (1,703) (3,353) Tax received / (paid) 1,491 (189) (567) Capital expenditure Purchase of tangible fixed assets (8,050) (12,276) (23,758) Sale of tangible fixed assets 2,537 6,357 14,848 (5,513) (5,919) (8,910) Acquisitions and disposals Purchase of subsidiaries and businesses - - (59) Net cash acquired - - 213 - - 154 Investment in associated undertaking (44) (98) (520) Deferred consideration paid (2,074) - (20,729) (2,118) (98) (21,095) Disposal of interest in associated undertaking - 378 377 Disposal of interest in subsidiaries 24,103 - - Net cash sold (6,781) (37) (37) 15,204 243 (20,755) Equity dividends paid - 2 (2,117) Net cash inflow / (outflow) before management of liquid 19,298 4,809 (6,325) resources and financing Management of liquid resources Deposits 431 439 (2,091) Financing (Repayment of loans) / new loans taken out (16,913) (7,367) 5,607 Capital element of finance leases (482) (75) (158) Purchase of own shares (29) (771) (771) (17,424) (8,213) 4,678 Increase / (decrease) in cash 2,305 (2,965) (3,738) Brammer NOTES TO THE ACCOUNTS 1 COMPARATIVE RESULTS Comparative figures for the year ended 31 December 2003 are taken from the company's statutory accounts which have been delivered to the Registrar of Companies with an unqualified audit report. Copies of the 2003 annual report and the 2004 interim report are available on the company's web site (www.brammer.plc.uk). 2 SEGMENTAL ANALYSIS Six months ended 30 June The business analysis of turnover, profit / (loss) before tax and net assets employed is as follows Brammer Industrial Services Livingston Total 2004 2003 2004 2003 2004 2003 Revised Revised Revised #'000 #'000 #'000 #'000 #'000 #'000 Turnover 136,876 133,873 19,305 44,931 156,181 178,804 Profit / (loss) before goodwill, 5,128 5,306 1,638 (923) 6,766 4,383 exceptional items and interest Goodwill (988) (1,001) (201) (381) (1,189) (1,382) Exceptional items (155) - (3,020) (5,205) (3,175) (5,205) Profit / (loss) before interest 3,985 4,305 (1,583) (6,509) 2,402 (2,204) Interest (1,556) (1,787) Profit / (loss) before tax 846 (3,991) Net operating assets excluding 52,378 63,565 - 35,217 52,378 98,782 goodwill Capitalised goodwill 33,346 36,622 - 13,079 33,346 49,701 Deferred consideration (4,981) (23,888) - (3,183) (4,981) (27,071) Net operating assets 80,743 76,299 - 45,113 80,743 121,412 Net debt (57,655) (67,266) Dividends (2,154) (2,154) Net tax (3,435) 3,349 Net assets employed 17,499 55,341 In 2004 all the on-going costs incurred by the central functions have been allocated to Brammer Industrial Services. The comparatives for 2003 have been revised accordingly. The geographic analysis of turnover, profit / (loss) before interest and net operating assets is as follows United Kingdom Other Europe Total 2004 2003 2004 2003 2004 2003 Revised Revised Revised #'000 #'000 #'000 #'000 #'000 #'000 Turnover 54,459 63,054 101,722 115,750 156,181 178,804 Profit before goodwill, exceptional 4,905 1,734 1,861 2,649 6,766 4,383 items and interest Goodwill - - (1,189) (1,382) (1,189) (1,382) Exceptional items (3,020) (524) (155) (4,681) (3,175) (5,205) Profit / (loss) before interest 1,885 1,210 517 (3,414) 2,402 (2,204) Net operating assets excluding 17,477 36,157 34,901 62,625 52,378 98,782 goodwill Capitalised goodwill - - 33,346 49,701 33,346 49,701 Deferred consideration - - (4,981) (27,071) (4,981) (27,071) Net operating assets 17,477 36,157 63,266 85,255 80,743 121,412 3 ACQUISITIONS AND DISPOSALS 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 was paid on completion, #3,000,000 will be payable in April 2005 and the balance of #2,500,000 payable in September 2005. 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. The disposal of Livingston's continental calibration businesses also completed on 31 March 2004. After adjustments for debt and cash the proceeds received were Euro28,962,000 with a further Euro2,038,000 to be received before 31 December 2004. The results of both businesses have been reported as discontinued businesses in the profit and loss account. During the year the discontinued businesses contributed #5,977,000 to the group's cash inflow from operating activities, paid #453,000 in respect of interest, received #1,942,000 in respect of taxation and utilised #4,501,000 for net capital expenditure. 4 EARNINGS PER SHARE 2004 2003 Weighted Weighted average Earnings/ average Earnings/ number (losses) number (losses) Earnings of shares per share Earnings of shares per share #'000 '000 pence #'000 '000 pence Profit for the financial year 3,574 2,112 before exceptional items and amortisation of goodwill Average number of shares in issue 47,865 7.5 47,865 4.4 Exceptional items (3,175) (6.7) (5,205) (10.9) Taxation adjustment on - - 1,627 3.4 exceptional items Amortisation of goodwill (1,188) (2.5) (1,365) (2.9) Amortisation of goodwill - (1) - (17) - associates Profit for the financial year (790) (1.7) (2,848) (6.0) Average number of shares in issue - 47,865 (1.7) 47,865 (6.0) 5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Six months to Six months to Full year 30 June 2004 30 June 2003 2003 #'000 #'000 #'000 Increase / (decrease) in cash 2,305 (2,965) (3,738) Cash movement from increase / (decrease) in debt and 16,964 7,003 (3,358) lease financing and liquid resources 19,269 4,038 (7,096) New finance leases - (89) (87) Loans sold / (acquired) 271 (3,238) (3,074) Exchange movements 2,524 (5,227) (6,712) Movement in net debt 22,064 (4,516) (16,969) Net debt at 31 December 2003 (79,719) (62,750) (62,750) Net debt at 30 June 2004 (57,655) (67,266) (79,719) 6 BASIS OF ACCOUNTING The interim financial statements have been prepared on the basis of the accounting policies set out in the group's 2003 statutory accounts. The interim financial statements were approved on 25 August 2004 by a duly appointed and authorised committee of the board and are neither audited nor reviewed by the auditors. 7 INTERIM ANNOUNCEMENT A copy of the interim 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, and will be posted to shareholders. 8 INTERIM DIVIDEND Relevant dates concerning the payment of the interim dividend are Record date 8 October 2004 Payment date 4 November 2004 This information is provided by RNS The company news service from the London Stock Exchange END IR BRGDIGBXGGSB
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