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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:6187O
Brammer PLC
25 February 2008
25 February 2008
PRELIMINARY RESULTS
Continued strong Growth in sales and profits
Dividend up 20%
Brammer, the market leading industrial services group today announces its
results for the year ended 31 December 2007, under IFRS.
Brammer's goal is to supply its customers with a consistent quality of product
and service, across the entire bearings, power transmission and fluid power
product range, anywhere in Europe. Brammer presently operates in 325 locations
in 15 countries.
FINANCIAL SUMMARY
2007 2006
£m £m Change
Revenue £379.6m £314.3m +20.8%
Profit before tax on ordinary activities (before amortisation and £15.4m £12.0m +28.3%
exceptional item)
Amortisation of acquired intangibles £(0.5)m £(0.2)m
Exceptional non cash pension curtailment £0.0m £2.8m
Profit before tax £14.9m £14.6m +2.1%
Net debt £59.4m £54.2m
Dividend 7.2p 6.0p +20%
Earnings per share - total
Basic 20.4p 20.4p
Diluted 20.1p 20.3p
Earnings per share - on profit before amortisation and exceptional
item
Basic 21.0p 16.6p +26.5%
Diluted 20.8p 16.6p
Highlights
* Strong growth driven by improving performance and successful
acquisitions both in continental Europe and in the UK. No signs of slowdown in
our markets.
* Significant market share gains.
* Overall organic growth in sales per working day of 13.6%, at constant
exchange rates, significantly exceeded expectations.
* Key Account sales grew by 26%, now representing 29% of total revenues,
with important new key account wins across the Group.
* Operating margins, before amortisation and exceptional item, improved
from 4.8% to 5.2% with underlying operating profit increasing by 31.8% to £19.9
million (2006: £15.1 million).
* Six acquisitions were completed during the year for a total
consideration of £15.2 million including acquired debt, contributing
£20.1million of sales to total revenues in 2007. All acquisitions meeting
expectations and being successfully integrated.
* Net borrowings increased from £54.2 million to £59.4 million,
reflecting acquisition costs, increased working capital driven by sales growth
and a currency exchange effect of £5.2 million. At constant currency, net debt
remained unchanged.
* The acquisitions were funded by a successful share placing in April
2007 which raised a net £15.3 million.
David Dunn, chairman, said:
"We continue to implement successfully our very clear and consistent strategy.
That success can be seen in our sales and profitability growth, improving
efficiencies and capabilities, and in the opportunities now open to us. For
2008 we anticipate further good progress across these areas. Reflecting the
Board's confidence in our prospects, we have recommended a 20% increase in the
dividend."
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
2007 PRELIMINARY RESULTS
Chairman's Statement
Summary
2007 was an outstanding year of progress and growth for Brammer. Sales grew by
20.8% to £379.6 million, profit before tax on ordinary activities before
amortisation and exceptional item increased by 28.3% to £15.4 million, and basic
earnings per share, on profit before amortisation and exceptional item, improved
by 26.5% to 21.0 pence. These results were achieved through a combination of
organic and acquisitive growth, and reinforce the clear and consistent strategy
being pursued by the group.
Trading Performance
Of the £65m increase in sales £20m came from acquisitions and £45m from organic
growth. Key Accounts were again an important factor and in 2007 these grew by
26% compared to the 14.5% increase in 2006. Importantly, there continues to be
excellent momentum in key accounts as we enter 2008. As our scale and European
footprint increases this area of growth will remain a key focus of our drive for
greater market share.
The high growth rates achieved do nevertheless come with significant challenges
to management. Our people have coped well with increasing pressures on systems,
costs, and working capital as the successful drive for sales and market share
continues apace. Gross margins, notwithstanding changes in sales and product
mix, at 30.4% were broadly in line with last year. The operating margin
(operating profit, before amortisation and exceptional item, to sales) increased
to 5.2% compared to 4.8% in 2006, continuing the rising trend of recent years.
Working capital days were similar to the levels of a year ago although the
absolute levels of working capital were significantly higher reflecting the
sales growth. At the year end the reported net debt was £59.4 million compared
to £54.2 million last year. The placing of shares made with institutional
investors in April 2007 raised net funds of £15.3 million. As forecast at the
time, this amount was expended during the year on acquisitions. With the
increased cashflow from the improved operating result, the group's overall cash
flow was broadly neutral. The £5.2 million increase in net debt resulted from
the exchange impact of the recent strengthening in the euro as the group's
borrowings are principally denominated in euros. During the latter part of the
year the opportunity was taken to increase borrowing facilities on satisfactory
terms and Brammer now has approximately £120m of total committed facilities
providing headroom to fund further expansion.
Strategy and Acquisitions
The consistency of our strategy has been clear for a number of years; nothing
has changed nor is it intended to change. Strategy is regularly reviewed by the
Board but we believe the initiatives put in place some four years ago are
demonstrably bearing fruit, and the clear intention is to continue with more of
the same. There are still many opportunities identified in our strategic plan
which will, when completed, benefit the group in the future.
In recent times we have stepped up the acquisition programme and have identified
many prospects in the hugely fragmented European market in which we trade. In
2007, six new businesses were acquired in Poland, Spain, France, Ireland, the
Czech Republic and the UK for an aggregate consideration of £15.2 million
(including net debt acquired). On a fully annualised basis these will add some
£45m to Brammer's sales and will open up considerable synergies and marketing
opportunities. There are very clear guidelines being followed on acquisition
criteria and to date we are delighted with the 'fit' and benefits flow to the
group. We intend to continue looking for further earnings and market enhancing
businesses within Europe to add to our growing presence.
People
There have been no changes to the Board during 2007. We have continued to
develop our HR capability with a large variety of training and educational
methods. I believe we have a first class management team in place and a skilled
and committed workforce. I thank all of them for their efforts on behalf of the
group in 2007 and congratulate them on their achievements.
Dividend
The final dividend recommended by the Board is 5.1p (2006 4.2p). This gives a
total of 7.2p for the year (2006 6.0p) which is an increase of 20.0%. The final
dividend will be payable on 4 July 2008 to shareholders on the register at the
close of business on 6 June 2008.
Prospects
We continue to implement successfully our very clear and consistent strategy.
That success can be seen in our sales and profitability growth, improving
efficiencies and capabilities, and in the opportunities now open to us. For
2008 we anticipate further good progress across these areas.
David Dunn
CHIEF EXECUTIVE'S REVIEW
Overview
During 2007 we made good progress in increasing Brammer's sales throughout
Europe, as we continued to be the leader in the consolidation of our chosen
market. Our strategy remains unchanged and continues to produce positive
results. We have now established Brammer as a common brand across Europe, and
the concept of "One Brammer" has become a reality - a business which can offer
consistent products and services in each of our 325 locations in 15 countries.
Our scale, geographic coverage, and focus as a technical specialist on a core
range of products differentiates us from our competitors and drives our
successful European Key Account business. Our ultimate aim is to be the
supplier of choice for those customers wanting a consistent quality of product
and service, across the entire bearings, power transmission and fluid power
product range, anywhere in Europe.
Operational Review
Brammer is the leading European supplier of technical components and related
services to the maintenance, repair and operations ("MRO") markets. In 2007
revenue increased by 20.8% to £379.6 million (2006: £314.3 million), whilst
operating profit before amortisation and exceptional item increased by 31.8% to
£19.9 million (2006: £15.1 million). Earnings per share (before amortisation
and exceptional item) increased by 26.5% to 21.0 pence per share (2006: 16.6
pence per share). Cash generated from operations increased by 40.0% to £16.7
million, despite the high growth rate and associated working capital
requirements. Sales and profits in our UK business increased significantly and
having experienced difficulties in France in 2006 we have since returned to good
growth in sales and profits.
Operating margin (operating profit before amortisation and exceptional item)
improved from 4.8% to 5.2% benefiting from an increase in scale and continued
cost control. Revenues per head increased by 6% to £170,000 indicating a further
improvement in productivity.
Summary table
External Revenue Operating Profit* Organic SPWD Growth
2007 2006 2007 2006 2007 2006
£m £m £m £m % %
UK 123.1 109.1 2.5 1.5 12.5% 6.1%
Germany 96.2 82.1 7.2 6.0 17.4% 10.6%
France 58.4 53.6 2.7 2.4 8.6% 1.9%
Spain 34.0 28.2 3.3 2.7 6.7% 4.8%
Benelux 35.0 27.0 2.6 2.0 25.7% 13.4%
Other 32.9 14.3 1.6 0.5 15.5% 14.7%
Total 379.6 314.3 19.9 15.1 13.6% 9.6%
* operating profit before amortisation and exceptional item.
In the UK, sales of £123.1 million represented an increase, on a sales per
working day basis ("SPWD"), of 12.5 % at constant exchange rates, which is the
basis used throughout this review, and produced an increase of £1 million in
operating profit, up 65% to £2.5 million. Growth was double digit in all 4
quarters, despite a fairly flat market, showing clear evidence of significant
market share gains. We opened 13 new Insites and increased sales through
Insites and part-time Insites (those locations where we have several regular
clinics with the customer's staff each week) by 33.3%. New contracts were won
with customers such as Hanson Building Products, Kronospan Ltd, Lafarge, Tinius
Olsen, Mars UK, and Anglian Water Services. Key Account sales grew by 24.9%,
and now represent 47% of sales. Our value proposition has been clearly
demonstrated with more than £15.1 million of documented, signed off cost savings
acknowledged by our customers. We established a new Insite for Alcoa at their
new smelting plant in Iceland, placing 8 Brammer UK staff on site to support the
customer. Mercia Engineering Supplies, acquired in June, has been successfully
integrated. We opened a "Centre of Excellence" at our National Distribution
Centre in Wolverhampton, creating a highly professional training and product
demonstration facility of over 600 square metres, showcasing the Brammer
capability for our customers, suppliers and staff. Aware of our environmental
responsibilities, over the last two years, we reduced in the UK the amount of
waste sent to landfill by 56%, increased cardboard recycling by over 400%, and
increased wood sent for recycling by 55%.
In a burgeoning market, German sales of £96.2 million represented an increase in
SPWD of 17.4%, which resulted in a 19.5% increase in operating profit to £7.2
million. Our earlier investments in Key Accounts continued to bear fruit, with
significant revenue growth in this segment, up 40%, and now representing nearly
25% of total revenues. We won new contracts with customers such as RWE, SULO,
Henkel, Alcan, Setech and many others. Our quality of service was recognised by
Robert Bosch where we gained their European supplier of the year award, the
first ever given to an indirect material supplier. We saw continued good growth
in pneumatics, a new product line in 2006, up 52%, whilst the mechanical power
transmission ("MPT") product group grew by 20%. We established a team of 10
technical sales and support engineers to grow our MPT business and expect
further significant progress in 2008. Our 5 Insites performed well, with sales
growth of 84%. We focused on the market segments of Food and Drink, Paper and
Packaging, and Building Materials; 44 customer events were held across Germany
addressing 660 MRO specialists from those segments.
French sales of £58.4 million represented an increase in SPWD of 8.6%,
accelerating throughout the year. Operating profit improved by 10% to £2.7
million. Key Account sales growth accelerated throughout the year, growing by
9.4%, and now representing 26% of turnover (38% including automotive). New
contracts were won with Arjowiggins, Legrand, Aoste, KP1, Panavi, Pasquier, and
Sodiaal. In December we completed the acquisition of Centre Roulement, a £3.3
million (Euro4.5 million) turnover business based in Clermont Ferrand.
Spanish sales of £34.0 million represented an increase in SPWD of 6.7%.
Operating profit grew by 21.5% to £3.3 million. Key Accounts grew by 12.9%, and
now represent 20% of sales. We opened 5 new Insites and won new contracts with
TRW, Sara Lee, Ahlstrom, Helios, Precon, Cerabrick, and many others. In July we
completed the acquisition of Boada in Catalonia for an initial consideration of
£2.3 million, and are now the clear market leader in this important region of
Spain.
Benelux sales of £35.0 million represented an increase in SPWD of 25.7%,
accompanied by an increase of £0.6 million in operating profit to £2.6 million.
We won new contracts with Thyssen Krupp, MBI, Dupont, ACG-Glaverbel and many
others. We opened new branches in Luxembourg and Eindhoven, and developed
relationships with many new suppliers.
In Poland, on a like for like basis, sales were up 8.0%, and we began the
integration of Fin into the Brammer group. We formed a new Key Account team and
had several successes with European Key Accounts. Several new Brammer suppliers
were introduced, and we began to roll out the Brammer approach of segment based
marketing.
In our Developing Businesses (comprising Austria, Hungary, the Czech Republic,
Slovakia, Italy and Ireland), total sales grew from £14.3 million to £20.3
million, reflecting the pull through from Key Accounts, acquisitions, and good
organic growth. In Austria, we achieved 7.3% growth on last year, as we
divested some low margin OEM (Original Equipment Manufacturers) business; MRO
(Maintenance, Repair and Operations) sales grew by 19.6%. In the Czech Republic
and Slovakia, SPWD increased by 16.4%, driven by Key Account growth of 56%. In
Hungary, SPWD growth was 17%, driven by Key Account growth and the introduction
of several new product lines. Our sales in Italy grew by 26% as we gained
further penetration at our pan European Key Accounts. Our acquisition of Rotate
in Ireland proceeded to plan, and we are already enjoying significant sales
growth from Brammer Key Accounts, and new supplier introductions.
Strategy
Our strategy remains unchanged under the headings of growth, capabilities,
synergies and costs.
Growth
Overall SPWD growth was 20.2%, with organic growth representing 13.6%,
significantly above our target of 8%. It is evident that our strategies of
attacking market segments with focussed marketing material and specialist sales
people, growth through Key Accounts, the development of Insites, and growth
through cross-selling and product range extension are contributing to
significant market share gains in all territories.
We continued to focus on a market segmentation approach, increasing our
knowledge of customers' processes and selling to their specific needs.
Throughout 2007 we saw some good results:
* Overall, we saw growth of Euro19.6 million or 20.6% in our four
targeted segments
* In Food and Drink we grew across the group by nearly Euro5 million, or
12.8%.
* In Germany where we focused on Pulp and Paper we saw an increase of
over Euro1 million or 22.7%.
* In Construction and Aggregates, a strong focus area for many of our
businesses, we saw excellent growth of 45.4% overall amounting to Euro11.4 million,
with the UK growing by 83% off an already significant base, the Czech Republic
growing by 62.5% and France growing by 24%.
* In Utilities, a relativity new segment for many of our businesses,
there was growth of 32%, helped by Euro1.4 million of growth in the UK.
Key Account sales grew by 26%, and now represent 29% of total sales, slightly
lower than that reported in the first half due to additional acquisitive growth
where Key Accounts typically represent a smaller proportion of sales. New
European contracts were won with Sara Lee, TRW, Alcan, Ahlstrom, Continental,
Setech, and Bonduelle.
We opened over 20 new Insites, with growth well in excess of 20% in several of
our territories.
Extending the product range to the full Brammer range in every territory
continued, and whilst bearing sales grew by 7.8% on a SPWD basis, non bearing
sales grew by 17.3%.
We had a busy year on acquisitions, welcoming 6 new companies to the Brammer
family in Poland (Fin), Spain (Boada), Czech Republic (ZPV), UK (Mercia
Engineering), France (Centre Roulement) and Ireland (Rotate). These
acquisitions had annualised revenue of over Euro60 million, and we extended our
acquisition pipeline, giving us confidence that we can achieve a similar level
of acquisitive growth in 2008. We aim, over the medium term, to match our
targeted 8% organic growth with an equivalent amount of acquisitive growth.
Capabilities
Distributed Learning
With more than 2,400 people in 325 locations in 15 countries our challenge is to
create learning which will be accessible to all. Our "Learning Management
System" (LMS) is used across the Group to track those people engaged on our
distributed learning programmes and to manage the whole learning process across
the group.
Our Foundation Programme continues to educate our people about products we offer
and the applications which we sell to our customers. Our Key Account toolkit is
a specific programme for those people who are involved in setting up,
implementing, delivering and monitoring Key Accounts within Brammer.
Finally our newest programme, the "Business of Brammer", was launched in the UK
business in January 2007, over 80% of customer facing staff gained this
qualification. During 2008 this programme will be rolled out to all of our
people, requiring translation into 8 languages
HR central services
Our group HR database interfaces with the local personnel and payroll systems.
In Q4 2007 a small project team defined a set of HR Standards that will be
implemented across the group during 2008. These standards include most
importantly, the requirement for each of the country businesses to develop good
quality succession plans for key positions in the group. During the year we
recruited over 300 people and successfully introduced them to our business
through our induction programmes.
Sales Management Process
During 2007, we established a pan-European team of Sales and Managing Directors
with the task of developing a common sales management process based on best
practice. This team produced a reference manual which includes the definition
of the "Brammer Way" of sales and sales management. During 2008 this manual and
the standards which it contains will be implemented across all the businesses on
a step by step basis.
Internal Communications
In 2007 we continued to implement action plans to improve the engagement of our
people based on the results of our externally commissioned group wide Internal
Opinion Survey. We once again had a good response rate to the survey of 61% and
the engagement rate was 82.5%. This shows improvement on 2006, confirming that
we have a highly motivated and engaged team in Europe. As a people business,
the engagement of our people is paramount and each of our businesses is targeted
with a people engagement improvement plan, on a year by year basis.
To assist effective communication across the group we are continuing the roll
out of the "One Brammer" Newsletter. This twice yearly document informs all
employees of developments in products, processes and people across the group.
Our group intranet was also further developed in order to provide a knowledge
based system giving information to everyone in the group and providing specific
information on the activities of the various European teams.
The Brammer European Council of employee representatives meets annually which
facilitates communication between the Works Councils and Employee Forums across
the group, focusing on the latest group information and clarifying any issues or
concerns expressed by our people.
Core Values
In 2007 we continued the awareness raising, implementation and recognition of
our core values - Striving for Consistency - with a Passion for Success -
through the Power of the Team. Through our Annual Achievement Awards we
recognise those of who have exceeded expectations in demonstrating these values.
Synergies
At the beginning of 2007, all our businesses adopted the Brammer name and logo -
to reinforce the "One Brammer" message to our customers, our suppliers and to
our people. The companies which have recently joined the group have implemented
the transition logo, ensuring that their name is closely associated with the
Brammer name in readiness for a full implementation of the Brammer logo after
about 18 months.
It is critical that the Information Systems used by the group are aligned and
integrated into a comprehensive and consistent set of solutions which support
the needs of all of our businesses across Europe. To achieve this we have
developed a robust IS strategy, with a clear roadmap, which typically retains
the local legacy ERP system, but connects our systems through an enterprise
application layer. We made good progress in the implementation of our Master
Data Management ("MDM") system, which is now rolled out to three major product
groups - Bearings, Seals and MPT (Mechanical Power Transmission), with 703,000
products included in the database, and the first 6 supplier catalogues loaded.
We further developed the Brammer Inline system, an inter-company trading tool
which allows all our staff across Europe to see stock availability in 9
countries, and to generate internal transactions to support customer
requirements, especially the development of e-commerce trading solutions for a
number of our customers. The use of Brammer Inline increased by 50% in 2007 and
represents approximately 1% of group purchases (Euro3.7m). This development was
driven by three factors:
* Improved ability to identify part numbers, underpinned by the
rollout of products into MDM which gives an opportunity to reduce lost sales and
expensive purchases from third parties;
* Increased electronic integration, removing duplicate processes and
streamlining transactions;
* Increased trading by all the businesses to source difficult products
in a year when lead times lengthened considerably
Our Momasse Stock Planning System, the aim of which is to implement a best
practice methodology across all the Brammer businesses for demand forecasting
and stock profiling has been rolled out to the branch network in Spain and
Germany, and we have begun to use the system to manage certain product groups on
a pan-European basis.
Finally, we made good progress in developing our e-commerce capabilities. Eight
major e-business projects were implemented for Key Account customers, including
fully integrated solutions where orders are received and processed
electronically through the central e-commerce hub.
Costs
We continued to work on increasing our spend with a smaller number of suppliers,
and improving the level of marketing support, pricing, and cooperation in the
field received from those suppliers. Our aim is to work manus in mano in the
field with our key strategic partners. The 6% improvement in productivity was
achieved by a significant number of best practice initiatives, including the
standardisation of our sales and sales management processes, as well as a number
of capital expenditure projects which improved the efficiency of our back
office.
Control of costs remains a key focus of the group, while meeting the necessary
investment in people and processes required to sustain our current and future
growth. Distribution costs grew in line with the sales growth.
The future
Our European footprint and our specialisation in the field of bearings,
mechanical power transmission, fluid power and general maintenance products, is
a strong platform upon which to achieve further gains in market share in our
fragmented market place. We are seeing an accelerating trend for customers
seeking a single European source of supply for our chosen product range, and we
shall continue to invest in sales resource and service delivery skills to take
advantage of this trend and to meet the ever more sophisticated demands of our
customers. Our approach of developing a market segment focus on specific
markets has proven successful, and sales growth through further development of
this approach will continue. Our pipeline of acquisition opportunities is
increasing and there are certainly sufficient opportunities which match
Brammer's product offering, approach to market, and culture to meet our
acquisitive growth aspirations. We will continue to lead the consolidation of
the European market in bearings, mechanical power transmission and fluid power.
Ian R Fraser
FINANCIAL REVIEW
Overview
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU.
Revenue
Revenue increased by 20.8%, of which continental Europe accounted for a 24.9%
increase and the UK a 13.0% increase. At constant exchange rates, revenue
increased by 20.3%. This equates to an increase in revenue per working day of
20.2%, comprising 24.3% in continental Europe and 12.5% in the UK. Acquisitions
contributed £20.1 million to revenue.
Profit
The profit for the year before tax increased to £14.9 million (2006: £14.6
million). Profit before amortisation and exceptional item, and after interest
was £15.4 million (2006 £12.0 million).
Return on operating capital employed
The return on operating capital employed, based on operating profit before
amortisation and exceptional item, was 24.9% for the total group. Organic return
on operating capital employed increased from 27.5% to 27.9%.
Goodwill
Goodwill in the balance sheet stands at £54.5 million at the end of the year
(2006: £39.4 million). In 2007, goodwill increased by a net £10.1 million in
respect of acquisitions, by £4.8 million due to exchange movements on goodwill
held in foreign currencies, and by £0.2m of final fair value adjustments to the
goodwill on the acquisition of Ramaekers in 2006. Impairment reviews have been
performed in accordance with IAS 36 and no impairment has been identified.
Trading during the year
Profit from operations before amortisation and exceptional item, interest and
tax ("underlying operating profit") increased by 31.8% to £19.9 million (2006:
£15.1 million), of which £9.2 million was delivered in the first half and £10.7
million in the second half (see table below).
First half Second half Full year
£m £m £m
2007
Revenue 181.8 197.8 379.6
Underlying operating profit 9.2 10.7 19.9
2006 £'m £'m £'m
Revenue 157.5 156.8 314.3
Underlying operating profit 7.4 7.7 15.1
For the first half, revenue increased by £24.3 million resulting in an increase
in underlying profit of £1.8 million and for the second half, revenue increased
by £41.0 million resulting in an increase in underlying profit of £3.0 million.
There was no significant impact on the year's results from exchange rates.
Interest
The net interest charge for the year was £4.5 million (2006: £3.1 million) which
included a discount unwind charge on deferred consideration of £0.2 million
(2006: £0.03 million). Excluding the discount unwind charge the effective
interest rate on average net borrowings was 6.9% (2006: 5.4%) reflecting higher
base rates in both sterling and euro interest rates in 2007 together with higher
interbank margins. The margin over interbank rates paid by the group remained
unchanged. Profit before tax, on ordinary activities before amortisation and
exceptional item, covers interest by 4.6x compared to 4.9x in 2006.
Tax
The tax charge for the year of £4.5 million represents an effective rate of tax
of 30.0% (2006: 33.0%). This includes deferred tax charges on the amortisation
of goodwill, primarily in Germany, and on the costs of share options. Going
forward the effective rate is anticipated to remain at a similar level.
Cash flow
2007 2006
£m £m
Cash inflow from operating activities 16.7 11.9
Net capital expenditure (purchases net of disposals) (4.9) (3.6)
Operational cash generation 11.8 8.3
Acquisitions (including net debt acquired) (15.2) (2.4)
Deferred consideration 0.0 (0.2)
Disposals 0.0 1.0
Tax (2.4) (2.1)
Interest, dividends, pension obligations & other (9.6) (9.2)
Net proceeds from issue of shares 15.4 0.1
Increase in net debt 0.0 (4.5)
Opening net debt (54.2) (50.6)
Exchange (5.2) 0.9
Closing net debt (59.4) (54.2)
Net debt increased by £5.2 million from £54.2 million to £59.4 million -
principally reflecting the exchange impact from the strengthening of the euro.
At the year end net debt/EBITDA stood at 2.5 times (2006: 3.0 times).
Cash inflow from operating activities of £16.7 million was up by £4.8 million
from £11.9 million in 2006.
Working capital ratios all remained broadly unchanged; the working capital
increase of £7.7 million reflected the high sales growth.
The £15.3 million of net proceeds received from the placing of new shares with
institutional investors in April 2007 was applied to fund the six acquisitions
made during the year.
Average net borrowings in 2007 were £60.0 million, including £2.8 million of
acquired loans, compared to £57.1 million in 2006.
Treasury
The group does not enter into speculative currency transactions.
The companies in the group account in their local currency, principally either
sterling or euros and mostly trade within their domestic markets in their local
currency. Where companies trade into export markets, this is generally in
response to the requirements of domestic customers who trade globally.
Net operating assets and financing by currency at 31 December 2007 were as
illustrated in the table below.
Net operating assets Financing Net assets employed
£m £m £m
Sterling 5.8 4.3 10.1
Euro 83.2 (55.0) 28.2
Other 14.7 (8.7) 6.0
103.7 (59.4) 44.3
Included in net operating assets is a pension fund liability primarily relating
to the UK scheme of £14.3 million (£10.5 million net of deferred tax) which in
2006 was £25.2 million (£17.6 million net of deferred tax). The reduction in the
liability principally reflects the higher discount rate used in the actuarial
calculation of the schemes' liabilities as a result of increases in corporate
bond yields. With effect from 1 March 2006, the UK scheme was closed to future
accrual. The company paid £2.0 million in 2007 (2006: £1.5 million) by way of
contributions to close the deficit and has currently agreed to pay £1.95 million
per annum, indexed for inflation, in each of the years 2007 to 2017 (inclusive).
A full funding valuation of the scheme was carried out with an effective date of
31 December 2005.
Overall therefore, at 31 December 2007, £28.2 million of the group's net assets
employed were held in euros, £10.1 million of net assets in sterling and £6.0
million net assets in other currencies. Net worth is £44.3 million (2006 £12.3
million).
In November 2007 the group increased its central borrowing facility from Euro110
million to Euro165 million in order to ensure the continuing availability of
sufficient resources to fund the planned organic and acquisitive growth.
The directors 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 operations
in Europe, organically and by acquisition.
Earnings per share
Basic earnings per share were 20.4p in 2007, the same figure as that reported
for 2006 which included the £2.8 million benefit from the exceptional non cash
pension curtailment. Earnings per share, before amortisation and exceptional
item, increased by 26.5% from 16.6p in 2006 to 21.0p in 2007.
Paul Thwaite
Brammer Preliminary results announcement
Consolidated income statement for the year ended 31 December 2007
2007 2006
Note £'000 £'000
Continuing operations
Revenue 2 379,577 314,345
Cost of sales (264,228) (218,359)
Gross profit 115,349 95,986
Distribution costs (95,469) (80,907)
Amortisation of acquired intangibles (444) (202)
Exceptional non cash pension curtailment 0 2,811
Total distribution costs (95,913) (78,298)
Operating profit 2 19,436 17,688
Operating profit before amortisation of acquired 19,880 15,079
intangibles and exceptional non cash pension curtailment
Amortisation of acquired intangibles (444) (202)
Exceptional non cash pension curtailment 3 0 2,811
Operating profit 2 19,436 17,688
Finance expense (4,611) (3,184)
Finance income 96 88
14,921 14,592
Profit before tax
(4,473) (4,818)
Taxation
Profit for the year attributable to equity shareholders 2 10,448 9,774
Earnings per share - total 4
Basic 20.4p 20.4p
Diluted 20.1p 20.3p
Earnings per share - on profit before amortisation 4
of acquired intangibles and exceptional item
Basic 21.0p 16.6p
Diluted 20.8p 16.6p
Brammer
Consolidated statement of recognised income and expense for the year ended 31
December 2007
2007 2006
Note £'000 £'000
Profit for the year 7 10,448 9,774
Net exchange differences on translating foreign operations 7 2,926 (583)
Actuarial gains 7 8,782 4,772
Tax on actuarial gains 7 (3,087) (1,432)
Excess tax on share option schemes 7 (279) 379
Net gains not recognised in income 8,342 3,136
statement
Total recognised income and expense attributable to equity 18,790 12,910
shareholders
Brammer Consolidated balance sheet as at 31 December 2007
2007 2006
Note £'000 £'000
Assets
Non-current assets
Goodwill 54,464 39,426
Acquired intangible assets 4,433 1,227
Other intangible assets 5,013 4,184
Property, plant and equipment 13,250 10,105
Deferred tax assets 4,329 8,336
81,489 63,278
Current assets
Inventories 67,926 49,710
Trade and other receivables 78,172 57,708
Cash and cash equivalents 6 10,464 8,798
156,562 116,216
Liabilities
Current liabilities
Financial liabilities - borrowings 6 (8,393) (18,536)
Trade and other payables (84,472) (66,900)
Deferred consideration (147) -
Current tax liabilities (4,016) (3,229)
(97,028) (88,665)
Net current assets 59,534 27,551
Non-current liabilities
Financial liabilities - borrowings 6 (61,475) (44,438)
Deferred tax liabilities (5,797) (4,321)
Provisions (858) (850)
Deferred consideration (14,329) (3,735)
Retirement benefit obligations (14,257) (25,211)
(96,716) (78,555)
Net assets 44,307 12,274
Shareholders' equity 7
Share capital 10,575 9,585
Share premium 18,017 3,628
Translation reserve 1,802 (1,124)
Retained earnings 13,913 185
Total equity 44,307 12,274
Brammer Consolidated cash flow statement for the year ended 31 December 2007
2007 2006
Note £'000 £'000
Cash generated from operations 5 16,729 11,943
Interest received 96 88
Interest paid (4,188) (2,870)
Tax paid (2,432) (2,132)
Decrease in pension obligations (2,172) (3,743)
Net cash generated from operating activities 8,033 3,286
Cash flows from investing activities
Proceeds from disposal of discontinued businesses (net of cash 0 1,000
disposed of)
Acquisition of subsidiaries (net of cash/excluding debt (12,375) (1,906)
acquired)
Deferred consideration paid on prior acquisitions 0 (192)
Proceeds from sale of property, plant and equipment 490 563
Purchase of property, plant and equipment (3,983) (2,417)
Additions to software development (1,433) (1,777)
Net cash used in investing activities (17,301) (4,729)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 15,379 88
New loans taken out / loan (repayments) (3,112) 2,908
New finance leases / principal (repayments) 148 (58)
Dividends paid to shareholders (3,327) (2,583)
Net cash generated from financing activities 9,088 355
Net decrease in cash and cash equivalents (180) (1,088)
Exchange gains and losses on cash and cash equivalents 606 (133)
Net cash at beginning of period 7,513 8,734
Net cash at end of period 7,939 7,513
Cash and cash equivalents 10,464 8,798
Overdrafts (2,525) (1,285)
Net cash at end of period 7,939 7,513
Brammer Accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are unchanged from those applied in the
preparation of the 2006 statements, and will be set out in full in the 2007
published financial statements. These policies have been consistently applied to
all the years presented.
Basis of preparation
This preliminary announcement does not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
The consolidated financial statements of Brammer plc have been prepared in
accordance with EU Endorsed International Financial Reporting Standards (IFRS),
IFRIC interpretations and the Companies Act 1985 applicable to companies
reporting under IFRS. The consolidated financial statements have been prepared
under the historical cost convention.
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 ended 31 December 2007:
* IFRIC 7, 'Applying the restatement approach under IAS 29', effective
for annual periods beginning on or after 1 March 2006. This interpretation is
not relevant for the group.
* IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning
on or after 1 May 2006. This interpretation has not had any impact on the
recognition of share-based payments in the group.
* IFRIC 9, 'Reassessment of embedded derivatives', effective for
annual periods beginning on or after 1 June 2006. This interpretation has not
had a significant impact on the reassessment of embedded derivatives as the
group assessed whether embedded derivatives should be separated using principles
consistent with IFRIC 9.
* IFRIC 10, 'Interims and impairment', effective for annual periods
beginning on or after 1 November 2006. This interpretation has not had any
impact on the timing or recognition of impairment losses as the group already
accounted for such amounts using principles consistent with IFRIC 10.
* IFRS 7, 'Financial instruments: Disclosures', effective for annual
periods beginning on or after 1 January 2007. IAS 1, 'Amendments to capital
disclosures', effective for annual periods beginning on or after 1 January 2007.
IFRS 4, 'Insurance contracts', revised implementation guidance, effective when
an entity adopts IFRS 7. The full IFRS 7 disclosures, including the sensitivity
analysis to market risk and capital disclosures required by the amendment of IAS
1 have been given in these financial statements. This standard does not have any
impact on the classification and valuation of the group's financial instruments.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year ended 31 December 2007
and have not been early adopted:
IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for annual
periods beginning on or after 1 March 2007. Management do not expect this
interpretation to have any significant impact on the group.
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. Management do not expect this interpretation to have
any significant impact on the group.
IFRS 8, 'Operating segments', effective for annual periods beginning on or after
1 January 2009. Management are reviewing the group's geographical segments as
currently reported. Management do not foresee any changes to the group's
business segments.
IAS 23, 'Borrowing costs' (Revised), effective for annual periods beginning on
or after 1 January 2009. Management do not expect this interpretation to be
relevant for the group.
Brammer NOTES TO THE ACCOUNTS
1. COMPARATIVE RESULTS
Comparative figures for the year ended 31 December 2006 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 2006 annual report and
the 2007 interim report are available on the company's web site
(www.brammer.biz).
2. SEGMENTAL ANALYSIS
The Group is primarily controlled on a country by country basis in line with
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. Of the acquisitions made
during the year all are included within "Other" except Mercia, which is included
under "UK", and Boada, which is included under "Spain".
UK Germany France Spain Benelux Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Year ended 31 Dec 2007
Revenue
Sales to external customers 123,142 96,204 58,376 33,948 35,017 32,890 379,577
Inter company sales 444 1,557 670 484 1,522 (4,677) -
Total 123,586 97,761 59,046 34,432 36,539 28,213 379,577
Operating profit before 2,549 7,180 2,679 3,274 2,580 1,618 19,880
amortisation of acquired
intangibles
Amortisation of acquired (444) (444)
intangibles
Total operating profit 2,549 7,180 2,679 3,274 2,580 1,174 19,436
Finance expense (4,611)
Finance income 96
Profit before tax 14,921
Taxation (4,473)
Profit for the year 10,448
attributable to equity
shareholders
Segment assets 43,420 27,011 30,937 22,636 19,735 25,055 168,794
Goodwill 945 29,746 4,073 4,096 6,507 9,097 54,464
44,365 56,757 35,010 26,732 26,242 34,152 223,258
Cash and cash equivalents 10,464
Deferred tax 4,329
Total assets 238,051
Segment liabilities (28,447) (9,967) (18,973) (11,604) (9,806) (6,533) (85,330)
Current tax (4,016)
Deferred tax (5,797)
Deferred consideration (14,476)
Financial liabilities (69,868)
Retirement benefit liability (14,257)
Total liabilities (193,744)
Net assets 44,307
Other segment items
Capital expenditure:
- intangible assets - 278 - - 77 1,078 1,433
- property, plant & equipment 1,823 331 198 223 735 673 3,983
Amortisation/depreciation
- intangible assets - (229) - (70) (44) (458) (801)
- property, plant & equipment (1,255) (169) (237) (194) (390) (462) (2,707)
Trade receivables impairment (108) (123) (50) (80) (37) 11 (387)
2. SEGMENTAL ANALYSIS (continued)
UK Germany France Spain Benelux Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Year ended 31 Dec 2006
Revenue
Sales to external customers 109,110 82,106 53,651 28,193 26,966 14,319 314,345
Inter company sales 263 1,468 299 375 2,083 (4,488) -
Total 109,373 83,574 53,950 28,568 29,049 9,831 314,345
Operating profit before 1,549 6,009 2,435 2,694 2,008 384 15,079
amortisation of acquired
intangibles and exceptional
items
Amortisation of acquired (202) (202)
intangibles
Exceptional non cash pension 2,811 2,811
curtailment
Total operating profit 1,549 6,009 2,435 2,694 2,008 2,993 17,688
Finance expense (3,184)
Finance income 88
Profit before tax 14,592
Taxation (4,818)
Profit for the year 9,774
attributable to equity
shareholders
Segment assets 37,923 22,261 25,988 12,785 16,170 7,807 122,934
Goodwill - 27,301 2,173 1,262 5,544 3,146 39,426
37,923 49,562 28,161 14,047 21,714 10,953 162,360
Cash and cash equivalents 8,798
Deferred tax 8,336
Total assets 179,494
Segment liabilities (22,393) (7,595) (15,695) (10,071) (7,969) (4,027) (67,750)
Current tax (3,229)
Deferred tax (4,321)
Deferred consideration (3,735)
Financial liabilities (62,974)
Retirement benefit liability (25,211)
Total liabilities (167,220)
Net assets 12,274
Other segment items
Capital expenditure:
- intangible assets - 16 - - 19 1,742 1,777
- property, plant & equipment 843 176 306 241 283 568 2,417
Amortisation/depreciation
- intangible assets - (220) - (27) (24) (313) (584)
- property, plant & equipment (1,125) (158) (255) (194) (303) (241) (2,276)
Trade receivables impairment (128) (46) - (17) 121 (70)
3. EXCEPTIONAL NON CASH PENSION CURTAILMENT
The exceptional non cash pension curtailment in 2006 comprised the curtailment
gain of £2,811,000 which reflected the impact of closing the defined benefit
section of the Brammer Services Limited Retirement Benefits Scheme to future
accrual with effect from 1 March 2006.
4. EARNINGS PER SHARE
2007
Earnings per share
Earnings Basic Diluted
£'000
Weighted average number of shares in issue ('000) 51,215 51,883
Profit for the financial year 10,448 20.4p 20.1p
Amortisation of acquired intangibles 444
Tax on amortisation of intangibles (114)
Earnings before amortisation of acquired intangibles 10,778 21.0p 20.8p
2006
Earnings per share
Earnings Basic Diluted
£'000
Weighted average number of shares in issue ('000) 47,872 48,083
Profit for the financial year 9,774 20.4p 20.3p
Amortisation of acquired intangibles 202
Exceptional non cash pension curtailment (note 3) (2,811)
Tax on exceptional non cash pension curtailment 843
Tax on amortisation of intangibles (49)
Earnings before amortisation of acquired intangibles and exceptional non 7,959 16.6p 16.6p
cash pension curtailment
5. CASH FLOW FROM OPERATING ACTIVITIES
2007 2006
£'000 £'000
Profit for the year attributable to equity shareholders 10,448 9,774
Tax charge 4,473 4,818
Depreciation of tangible and intangible assets 3,952 3,062
Share options - value of employee services 1,191 791
Gain on sale of property, plant and equipment (169) (383)
Financing expense 4,515 3,096
Movement in working capital (7,681) (9,215)
Cash generated from operations 16,729 11,943
6. CLOSING NET DEBT
2007 2006
£'000 £'000
Borrowings - current (8,393) (18,536)
Borrowings - non-current (61,475) (44,438)
Cash and cash equivalents 10,464 8,798
Closing net debt (59,404) (54,176)
7. CHANGES IN SHAREHOLDERS' EQUITY
Share Share Treasury Translation Retained
capital premium shares reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2007 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 shareholders - - - - 10,448 10,448
Unrealised exchange movement - - - 2,926 - 2,926
Transfer on vesting of own shares - - 462 - (462) -
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 schemes - - - - (279) (279)
Dividends - - - - (3,327) (3,327)
Actuarial gains on pensions
schemes - - - - 8,782 8,782
Tax on actuarial gains on pensions
schemes - - - - (3,087) (3,087)
Movement in year 990 14,389 462 2,926 13,266 32,033
At 31 December 2007 10,575 18,017 (53) 1,802 13,966 44,307
Placing
On 23 April 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.
Dividends
A dividend, amounting to £2,218,000, which related to 2006 was paid on 9 July
2007 (2006: £1,730,000). An interim dividend amounting to £1,109,000 (2006:
£853,000) was paid on 2 November 2007. The directors propose a dividend of 5.1p
per share (2006: 4.2p) payable on 4 July 2008. This dividend amounting to
£2,697,000 (2006: £2,218,000) has not been recognised as a liability in these
financial statements.
Share Share Treasury Translation Retained
capital premium shares reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2006 9,573 3,552 (958) (541) (10,558) 1,068
Shares issued during the year 12 76 - - - 88
Profit for the year attributable
to equity shareholders - - - - 9,774 9,774
Unrealised exchange movement - - - (583) - (583)
Transfer on vesting of own shares - - 443 - (443) -
Current tax on shares vesting - - - - 179 179
Deferred tax on shares vesting - - - - (179) (179)
Value of employee services - - - - 791 791
Excess tax on share option schemes - - - - 379 379
Dividends - - - - (2,583) (2,583)
Actuarial gains on pensions
schemes - - - - 4,772 4,772
Tax on actuarial gains on pensions
schemes - - - - (1,432) (1,432)
Movement in year 12 76 443 (583) 11,258 11,206
At 31 December 2006 9,585 3,628 (515) (1,124) 700 12,274
Retained earnings as disclosed in the Balance Sheet (page 16) represent the
retained earnings and treasury share balances above.
8. PRELIMINARY ANNOUNCEMENT
A copy of the preliminary announcement 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. It will also be available on the
company's web site www.brammer.biz from 25 February 2008.
9. FINAL DIVIDEND
Relevant dates concerning the payment of the final dividend are:
Annual general meeting 20 May 2008
Record date 6 June 2008
Payment date 4 July 2008
10. STATUTORY ACCOUNTS
This preliminary announcement is taken from the full accounts which have
received an unqualified report by the auditors and will be filed with the
Registrar of Companies following the company's annual general meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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