TIDMBMTO
RNS Number : 6275M
Braime Group PLC
12 May 2020
BRAIME GROUP PLC
(formerly T.F. & J.H. BRAIME (HOLDINGS) P.L.C.)
("Braime" or the "Company" and with its subsidiaries the
"Group")
ANNUAL RESULTS FOR THE YEARED 31ST DECEMBER 2019
At a meeting of the directors held today, the accounts for the
year ended 31st December 2019 were submitted and approved by the
directors. The accounts statement is as follows:
Chairman's statement
A big thank you to all our staff
I want to begin this year's Statement by thanking our staff in
the UK and overseas for their support. At a time when everyone is
naturally worried for themselves and for their families, our staff
have shown courage, resilience, and a willingness to learn new
skills so they can cover for their colleagues. Their ongoing
support has been amazing.
Variously they have been working from home or coming into work
on a rota basis, and where necessary, many staff at all levels have
continued to work on site in both office and manufacturing
settings. In turn, we have tried our very best in all our locations
to create a safe environment and to enable social-distancing.
Our current trading position
As a result of our staff's huge efforts, we have been able to
continue processing, manufacturing and shipping customer orders.
Demand for our products has remained high in the UK and globally.
Our manufacturing business supplies oil filters that have to be
replaced four times a year to keep modern commercial vehicles on
the road; equally our material handling components are essential to
distribute and process the cereals used to produce food.
To meet this demand, we have had to re-introduce manufacturing
on a 24-hour basis, which is particularly challenging in the
current circumstance. It is only possible because of the
flexibility shown by our staff. Some of our overseas subsidiaries
were forced to shut temporarily but have all now re-opened,
including 4B China. Other subsidiaries, which were initially
closed, have reopened with certificates exempting them from local
"lockdowns" due to the importance of maintaining their
supplies.
We are increasingly confident that by continuing to support our
customers, we will be able to pull through, survive as a business,
maintain long term employment and achieve a positive future for us
all.
Summary of 2019 results
The world has changed and 2019 now seems a particularly long
time ago. In 2019, the Group's sales revenue fell by 6.4% from
GBP35.7m to GBP33.4m but the operating profit fell from GBP3.2m to
GBP2.2m. After deducting interest charges and tax, the net profit
in 2019 was down GBP0.9m to GBP1.3m.
In last year's Statement on the 2018 result, I indicated that
the results were exceptional due to high demand in the US market.
In an already exceptional year for sales, margins had been further
boosted by the steep fall in sterling which substantially increased
the local gross margins of goods exported from the UK, which make
up the majority of Group sales. The results in 2018 were then
further enhanced when overseas profits were consolidated back into
sterling.
In my Chairman's Statement for 2018 and my Interim Statement in
2019, I also warned that revenues in the year in progress had
already been effected by much weaker global demand due to the
reduction in investment following the severe droughts in South
America and Australia in late 2018, by the general economic
slowdown in the European market in 2019, and by the negative effect
on the US Agricultural market caused by Trump's Trade War with
China. Additionally, sterling strengthened when the UK left the EU,
reversing some of the FX gains which had contributed to the very
strong results in 2018.
The Group's concentration on the agricultural market, a
long-term growth sector, is one of our strengths but it does expose
our business to the year on year fluctuations in the agricultural
market. This is an area where we can find a way of reducing our
future dependence, but our vulnerability to large fluctuations in
the exchange rate is not. We hold funds in a spread of key
currencies, but hedging is expensive and ultimately unwinds.
The lower result in 2019, while slightly disappointing, remains
a relatively good year when put in context, and falls within the
pattern of a long-term increase in the profitability of the
Group.
Braime Pressings Limited specialises in the manufacture of deep
drawn presswork concentrated on supplies to the commercial vehicle
industry. In 2019, we were forced to concede "cost downs" and
additionally sales revenue in the year was lower than in 2018.
Volume in manufacturing is critical in order to cover high fixed
costs, so a small decrease in external revenues resulted in a
disproportionate loss of GBP252,000 in 2019.
The 4B material handling division markets its products through
exclusive distributors in approximately 50 countries, 6 regional
overseas subsidiaries and 2 overseas branches. The division's niche
products, both mechanical and electrical, are focused on providing
innovative engineering solutions. External sales in 2019 were
GBP1.4m lower, and together with the other factors explained
earlier, this resulted in a reduction in profit of GBP0.6m in this
division.
Capital expenditure
In 2019, the Group invested GBP1.7m in new plant and machinery
compared to GBP1.8m in 2018. Major investment has gradually
transformed the Group's manufacturing facilities. The increase in
the outstanding balance of depreciation is a drag on the results,
but without steady improvements in taking cost out, the ability to
compete in the long term is lost permanently. The investments in
2019 were principally in new manufacturing equipment installed in
the UK and USA. More detail is given in the Strategic Report. In
the current year, we have no major planned investment in new
machinery and the focus is on completing existing projects.
In January, we announced an investment in a new 2,200m(2)
facility to enable 4B France to relocate from their outdated and
inadequate premises. The decision to construct a modern office and
warehouse unit for 4B France, our European distribution business,
was a major part of our strategy to mitigate against the potential
negative effects of a "No deal" Brexit but remains an essential
step to maintain and grow our sales in the European market.
Leasing proved difficult and cost prohibitive and would have
necessitated moving to a more expensive location, in Amiens, 25km
away, and also required us to compensate our staff for an increase
in their commuting distance. Instead, we purchased land from an
adjacent commune, Villers Bretonneux, and are constructing new
bespoke premises, which will improve operating efficiencies and
have the additional benefit of almost immediate access to the
French motorway network. The total project cost is EUR2.2m,
financed by a cash investment of EUR0.5m and bank loans of EUR1.7m
borrowed at 1.3% per annum. Relocation is planned for February
2021.
Cash and financial position
After funding capital investments, expenditure and working
capital, cash outflow at the end of 2019 was GBP0.8m. More detail
follows in the Strategic Review. Currently, the Group has available
headroom of GBP2.3m which we believe is more than sufficient to
operate the business, even allowing for the current exceptional
circumstances.
Free Trade Agreement with the EU
After three years wasted by internal fighting, and following the
clear result of the last UK election, the UK finally left the EU on
the 31st January 2020. Hopefully this painful chapter is finally
closed and the position of the UK Government is unambiguous.
Although the UK and EU have not yet reached agreement on the terms
of a Free Trade Deal, given that it remains in their mutual
self-interest, and even more so now in the dire economic
circumstances caused by the Coronavirus epidemic, a failure to do
so is almost unimaginable. No doubt, as usual, final agreement will
only be achieved at the very last moment.
Dividend
In October 2019 the first interim dividend was increased from
3.5p to 3.6p. It had been the Board's intention to increase the
second interim dividend but after careful thought, the directors
have decided it is no longer appropriate to do so and instead have
decided to maintain last year's dividend of 8.0p, making a total
dividend for the year of 11.6p. The second interim dividend of 8.0p
will be paid on the 5th June 2020 to the holders of Ordinary and
'A' Ordinary Shares on the 22nd May 2020.
2020 AGM
At the time of writing, the UK government has prohibited public
gatherings and non-essential travel. The 2020 AGM will therefore be
run as a closed meeting and shareholders will unfortunately not be
able to attend in person. Shareholders are strongly encouraged to
submit a proxy vote in advance of the meeting and details of how to
do this can be found on the notes to the Notice of the Meeting
within the Annual Report. Shareholders are encouraged to appoint
the Chairman of the meeting as their proxy rather than a named
person who will not be permitted to attend the meeting. This will
ensure your votes are cast in accordance with your wishes.
The Annual General Meeting of the members of the Company will be
held at the registered office of the company at Hunslet Road,
Leeds, LS10 1JZ on Monday 29th June 2020 at 11.45am. The Annual
Report and financial statements will be sent to shareholders by 1st
June 2020 and will also be available on the Company's website (
www.braimegroup.com ) from that date.
Longer-term outlook and strategy
In both March and April, we have achieved sales revenues very
close to our original budget set in December 2019 and demand is
likely to remain at similar levels for the next few months. While
forward orders have now fallen very slightly, our customers advise
us that they currently have several months backlog for projects for
completion in 2020, which has built up due to the temporary closure
of construction sites. So, our subsidiaries are hopeful of a
"bounce" once manufacturing and construction sites re-open.
It is important to emphasise that this is all subject to change,
as we are in unknown territory and whilst the Group is currently in
a relatively fortunate position, we are taking the necessary steps
to ensure we remain flexible, carefully managing our cashflow, and
keeping expenditure under constant review.
Going further forward, a decline in the new build of commercial
vehicles is a strong possibility as demand for new commercial
vehicles is likely to fall in the current climate. Similarly, while
our OEM customers who manufacturing new handling and processing
facilities, currently have full order books for projects to be
completed in 2020, it is likely that order books will not be
refilled quickly by new equipment for projects in 2021, as the
appetite for risk and investment declines and finance becomes less
available.
We need to start immediately on finding new ways of working for
all our staff, both those on site and those working from home. At
the same time, we must prepare ourselves for the likelihood of
lower demand while the world economy struggles to recover and
concentrate ourselves on reducing cost and increasing
efficiency.
Our policy has always been to stay close to our customers and we
will have to find innovative ways of achieving this. Above all we
need to refocus on our long-term strategy of introducing new
products and new customers to compensate for the decline in
existing products if we are to maintain the recent growth of the
Braime Group.
Nicholas Braime, Chairman
12(th) May 2020
For further information please contact:
Braime Group PLC
Nicholas Braime/Cielo Cartwright
0113 245 7491
W. H. Ireland Limited
Katy Mitchell
0113 394 6628
The directors present their strategic report of the Company and
the Group for the year ended 31st December 2019.
Principal activities
The principal activities of the Group during the year under
review was the manufacture of deep drawn metal presswork and the
distribution of material handling components and monitoring
equipment. Manufacturing activity is delivered through the Group's
subsidiary Braime Pressings Limited and the distribution activity
through the Group's 4B division.
Braime Pressings specialises in metal presswork, including deep
drawing, multi-stage progression and transfer presswork. Founded in
1888, the business has over 130 years of manufacturing experience.
The metal presswork segment operates across several industries
including the automotive sector and supplies external as well as
group customers.
The subsidiaries within the 4B division are industry leaders in
developing high quality, innovative and dependable material
handling components for the agricultural and industrial sectors.
They provide a range of complementary products including elevator
buckets, elevator and conveyor belting, elevator bolts and belt
fasteners, forged chain, level monitors and sensors and controllers
for monitoring safety and providing preventative maintenance
systems which facilitate handling and minimise the risk of
explosion in hazardous areas. The 4B division has operations in the
Americas, Europe, Asia, Australia and Africa and export to over
fifty countries. The US subsidiary also has a new injection-molding
plant. All injection-molded products are made wholly for internal
consumption and this is classed as 4B division activity rather than
included in the manufacturing segment.
Performance highlights
For the year ended 31st December 2019, the Group generated
revenue of GBP33.4m, down GBP2.3m from prior year. Profit from
operations was GBP2.2m, down GBP1.0m from prior year. EBITDA was
GBP3.5m. At 31st December 2019, the Group had net assets of
GBP14.3m. The full year results are in line with expectations at
the half-year, when there were indications that the agricultural
markets globally were seeing a reduction in activity, in part due
to the continuing US-Sino tariff retaliations.
Cash flow
Inventories increased by GBP0.7m and trade and other receivables
decreased by GBP1.0 m reflecting the reduced sales activity. These
were partly offset by a decrease in our trade and other payables of
GBP1.5m. In total the business generated funds from operations of
GBP1.7m (2018 - GBP2.4m). The group maintained its programme of
investment during the year, spending GBP1.7m on capital items.
After the payment of other financial costs and the dividend, the
cash balance (net of overdraft) was GBP0.7m, a decrease of GBP0.8m
from the prior year.
Bank facilities
The Group's operating banking facilities are renewed annually.
The arrangements with HSBC provide sufficient headroom to the Group
and have allowed us to make the necessary investments in the year.
The business has good relations with its bankers who are cognizant
of the general economic uncertainties facing the business as a
result of the corona virus outbreak and the yet unknown trading
rules that will apply when transitional arrangements for Brexit
terminate at the end of the year. The Group has kept abreast of
government backed loans and grants and will apply for relevant
funding as appropriate to its needs.
Taxation
The tax charge for the year was GBP0.4m, with an effective rate
of tax of 23% (2018 - 26%). The effective rate is higher than the
standard UK tax rate of 19% (2018 - 19%), this results from the
blending effect of the different rates of tax applied by each of
the countries in which the Group operates, in particular, our
operations in the US less group reliefs available from losses. In
any financial year the effective rate will depend on the mix of
countries in which profits are made, however the Group continues to
review its tax profile to minimise the impact.
Capital expenditure
In 2018, the Group invested GBP1.7m (2018 - GBP1.8m) in plant
and equipment. GBP0.3m relates to the purchase of a new injection
molding machine in the USA. Other major investments relate to
installation of two hydraulic presses and a bolt forming machine in
the UK, as well as a 190KW solar panel system which will provide
circa 25% of the UK businesses' electricity requirements. The Group
also introduced an automated components washer. Our chief
investment plan in 2020 is the set-up of a new warehouse for 4B
France at a cost of EUR2.2m. This will be partly funded from
existing cash resources and bank facilities. In addition, Bank of
Credit du Nord and BPI-France are jointly providing a loan of
EUR1.7m repayable over 15 years at an interest rate of 1.3%. In the
light of the Covid-19 pandemic we are keeping a careful review of
the timing of funds draw-down.
Balance sheet
Net assets of the Group have increased to GBP14.3m (2018 -
GBP13.3m). A foreign exchange loss of GBP0.3m (2018 - gain of
GBP0.2m) was recorded on the re-translation of the net assets of
the overseas operations, which has decreased retained earnings in
the year.
Principal exchange rates
The Group reports its results in sterling, its presentational
currency. The Group operates in six other currencies and the
principal exchange rates in use during the year and as at 31st
December 2018 are shown in the table below. Following the exit of
the UK from the EU, sterling strengthened against many of the
currencies in which we operate and consequently as mentioned above
the Group's reserves decreased by GBP0.3m from losses in foreign
currency translations.
Average rate Average rate Closing rate Closing rate
Currency Symbol Full year Full year 31st Dec 31st Dec
2019 2018 2019 2018
Australian Dollar AUD 1.8399 1.787 1,8834 1.809
Chinese Renminbi
(Yuan) CNY 8.8096 8.700 9.1501 8.676
Euro EUR 1.1443 1.130 1.1765 1.115
South African Rand ZAR 18.4531 17.627 18.5475 18.364
Thai Baht THB 39.5778 42.962 39.3460 41.301
United States Dollar USD 1.2807 1.332 1.3210 1.277
Our business model
The two segments of the Group are very different operations and
serve different markets, however together they provide
diversification, strength and balance to the Group and their
activities.
The focus of the manufacturing business is to produce quality,
technically demanding components. The use of automated equipment
allows us to produce in high volumes whilst maintaining flexibility
to respond to customer demands.
The material handling components business operates from a number
of locations around the globe allowing us to be close to our core
markets. The focus of the business is to provide innovative
solutions drawing on our expertise in material handling and access
to a broad product range.
Performance of Braime Pressings Limited, manufacturer of deep
drawn metal presswork
Braime Pressings Limited sales fell by GBP1.3m compared to prior
year. Intercompany sales and external sales were GBP3.4m each as
compared to GBP3.9m and GBP4.3m respectively in 2018. This has
resulted in a loss for the period of GBP0.3m (2018 - profit
GBP0.1m). The manufacturing arm continues to face pricing pressures
in a highly competitive environment , however the board believes
the business continues to add strategic value through its supply to
the 4B division and complementary engineering expertise.
Performance of the 4B division, world wide distributor of
components and monitoring systems for the material handling
industry
Revenues fell from GBP37.9m to GBP36.2m, with external sales
down GBP1.4m. The 4B group sales were affected by the US-Sino trade
war but a significant reduction in sales was in the UK and European
market which fell by GBP1.4m compared to 2018. Last year's sales
were particularly high due to stock build in anticipation of
Brexit. Profit for the period fell by GBP0.6m to GBP1.8m as a
result of reduced sales.
We continue to invest in product development and enhance
features of our secure, cloud based industrial monitoring solution,
Hazardmon which is revolutionary for introducing greater levels of
transparency and record keeping.
The Covid-19 pandemic casts a long shadow over the global
economy and all businesses. It is too early to assess its impact on
the Group's performance in 2020 and revenues and profits may be
affected over the coming months. The Group's underlying business
model is on a solid base and its wide geographical presence in the
agricultural equipment sector, which is essential for the
maintenance of food supply, provides it with some buffer in the
current turbulent economic climate. With the continuing support of
its bankers, the loyalty of its dedicated employees and its
longstanding customers and partners, the Group remains positive it
will weather these adversities.
Key performance indicators
The Group uses the following key performance indicators to
assess the performance of the Group as a whole and of the
individual businesses:
Key performance indicator Note 2019 2018
Turnover growth 1 (6.4%) 13.6%
Gross margin 2 49.1% 48.4%
Operating profit 3 GBP2.21m GBP3.24m
Stock days 4 176 days 141 days
Debtor days 5 57 days 56 days
Notes to KPI's
1. Turnover growth
The Group aims to increase shareholder value by measuring the
year on year growth in Group revenue. Whilst 2019 is down on the
prior year, 2018 was an exceptional year, with sales increasing
from stock-build up by customers in anticipation of Brexit.
2. Gross margin
Gross profit (revenue plus change in inventories less raw
materials used) as a percentage of revenue is monitored to maximise
profits available for reinvestment and distribution to
shareholders. The year on year improvement in margin has resulted
from operational efficiencies in the supply chain.
3. Operating profit
Sustainable growth in operating profit is a strategic priority
to enable ongoing investment and increase shareholder value.
Reduced turnover has impacted operating profit which has also been
affected by the sterling strengthening. The Group's investment in
new plant and machinery over the past two years has increased its
depreciation expense.
4. Stock days
The average value of inventories divided by raw materials and
consumables used and changes in inventories of finished goods and
work in progress expressed as a number of days is monitored to
ensure the right level of stocks are held in order to meet customer
demands whilst not carrying excessive amounts which impacts upon
working capital requirements. Stockholding has increased in part
due to the timing of orders in the UK close to the year end.
5. Debtor days
The average value of trade receivables divided by revenue
expressed as a number of days. This is an important indicator of
working capital requirements. Debtor days still average within the
standard payment terms of 60 days, however senior management are
focused on reducing this to improve cash.
Other metrics monitored weekly or monthly include quality
measures (such as customer complaints), raw materials buying
prices, capital expenditure, line utilisation, reportable accidents
and near-misses.
Adoption of new standard IFRS 16
The Group adopted IFRS 16 at 1st January 2019. Please refer to
note 9 of the financial statements.
Principal risks and uncertainties
Coronavirus Covid-19
At the time of writing, the Covid-19 pandemic presents by far
the largest risk and uncertainty facing all businesses world-wide.
The risk presents itself in various forms, including but not
limited to the threat of continuity of supplies, the health of our
employees, the ability of customers to meet payments, and currency
fluctuations resulting from government interventions.
The Group supplies essential components parts into the
agricultural materials handling sector and it is anticipated that
governments will take all necessary steps to protect the food
supply chain. Consequently, the Group does not expect that
governments will shut down its operations (at least not for any
length of time) as has been the case with the hospitality and
leisure industries. Early indications are that demand for staple
milled products such as rice and flour is on the increase.
Nevertheless, threats emerge from key personnel becoming infected
with the virus, suppliers being unable to fulfil orders, be it raw
materials or inventory supplies or logistics partners unable to
conduct deliveries. The Group has invoked its Business Continuity
Plan and as far as possible put in place contingency measures to
maintain operations, including the retraining of personnel in key
processes, social distancing and reviewing alternative suppliers.
The Group's key objective is to ensure the safety and well-being of
our employees, while continuing to trade as normally as possible.
The Group is closely monitoring developments with its various
subsidiaries as new announcements unfold, to ensure that the
businesses can respond with agility to guidance and mandates, and
in order to avail itself of the relevant government support as they
become available.
General risks
The market remains challenging for our manufacturing division,
due to pricing pressures throughout the supply chain. The
maintenance of the TS16949 quality standard is important to the
Group and allows it to access growing markets within the automotive
and other sectors. A process of continual improvement in systems
and processes reduces this risk as well as providing increased
flexibility to allow the business to respond to customer
requirements.
Our 4B division maintains its competitive edge in a price
sensitive market through the provision of engineering expertise and
by working closely with our suppliers to design and supply
innovative components of the highest standard. In addition, ranges
of complementary products are sold into different industries. The
monitoring systems are developed and improved on a regular
basis.
The directors receive monthly reports on key customer and
operational metrics from subsidiary management and review these.
The potential impact of business risks and actions necessary to
mitigate the risks, are also discussed and considered at the
monthly board meetings. During the year the directors undertook a
formal business continuity planning exercise with respect to its UK
operations. The more significant risks and uncertainties faced by
the Group are set out below:-
-- Raw material price fluctuation :- The Group is exposed to
fluctuations in steel and other raw material prices and to mitigate
this volatility, the Group fixes its prices with suppliers where
possible.
-- Reputational risk :- As the Group operates in relatively
small markets any damage to, or loss of reputation could be a major
concern. Rigorous management attention and quality control
procedures are in place to maximise right first time and on time
delivery. Responsibility is taken for ensuring swift remedial
action on any issues and complaints.
-- Damage to warehouse or factory:- Any significant damage to a
factory or warehouse will cause short-term disruption. To mitigate
these risks, the Group has arrangements with key suppliers to step
up supply in the event of a disruption.
-- Brexit impact:- The Group, along with other businesses, faces
economic and political uncertainty in the future resulting from the
UK leaving the EU as the trade deal with the EU is yet to be
determined when the transitional arrangements end on 31st December
2020. However, the directors consider that its operations in Europe
provide the group with further trading options and the fact that
three-quarters of the Group's revenues are derived from markets
outside the EU provides the Group with some resilience to any
impact.
-- Economic fluctuations :- The Group derives a significant
proportion of its profits from outside the UK and is therefore
sensitive to fluctuations in the economic conditions of overseas
operations including foreign currency fluctuations.
Financial instruments
The operations expose the Group to a variety of financial risks
including the effect of changes in interest rates on debt, foreign
exchange rates, credit risk and liquidity risk.
The Group's exposure in the areas identified above are discussed
in note 17 of the financial statements.
The Group's principal financial instruments comprise sterling
and foreign cash and bank deposits, bank loans and overdrafts,
other loans and obligations under finance leases together with
trade debtors and trade creditors that arise directly from
operations. The main risks arising from the Group's financial
instruments can be analysed as follows:
Price risk
The Group has no significant exposure to securities price risk,
as it holds no listed equity instruments.
Foreign currency risk
The Group has a centralised treasury function which manages the
Group's banking facilities and all lines of funding. Forward
contracts are on occasions used to hedge against foreign exchange
differences arising on cash flows in currencies that differ from
the operational entity's reporting currency.
Credit risk
The Group's principal financial assets are bank balances, cash
and trade receivables, which represent the Group's maximum exposure
to credit risk in relation to financial assets.
The Group's credit risk is primarily attributable to its trade
receivables. Credit risk is mitigated by a stringent management of
customer credit limits by monitoring the aggregate amount and
duration of exposure to any one customer depending upon their
credit rating. The Group also has credit insurance in place. The
amounts presented in the balance sheet are net of allowance for
doubtful debts, estimated by the Group's management based on prior
experience and their assessment of the current economic
environment.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. The Group has no significant
concentration of credit risk, with exposure spread over a large
number of counterparties and customers.
Liquidity risk
The Group's policy has been to ensure continuity of funding
through acquiring an element of the Group's fixed assets under
finance leases and arranging funding for operations via medium-term
loans and overdrafts to aid short term flexibility.
Cash flow interest rate risk
Interest rate bearing assets comprise cash and bank deposits,
all of which earn interest at a fixed rate. The interest rate on
the bank overdraft is at market rate and the Group's policy is to
keep the overdraft within defined limits such that the risk that
could arise from a significant change in interest rates would not
have a material impact on cash flows. The Group's policy is to
maintain other borrowings at fixed rates to fix the amount of
future interest cash flows.
The directors monitor the level of borrowings and interest costs
to limit any adverse effects on the financial performance of the
Group.
Health and safety
We maintain healthy and safe working conditions on our sites and
measure our ability to keep employees and visitors safe. We
continuously aim to improve our working environments to ensure we
are able to provide a safe occupational health and safety standards
to our employees and visitors. The directors receive monthly
H&S reports and we carry out regular risk management audits to
identify areas for improvement and to minimise safety risks. Our
H&S manager has been involved in formulating plans and
procedures in the event of an outbreak of the Covid-19 virus in our
premises. As part of our precautionary measures we have introduced
social distancing and hand sanitisers in our factory and those able
to work from home are enabled to do so. As a global business, the
Group is able to tap into the experience of its various
international locations to share best practice and learning
points.
Research and development
The Group continues to invest in research and development and
regularly liaises with university engineering groups with a view to
improving features of its products. This has resulted innovations
in the products which will benefit the Group in the medium to long
term.
Duties to promote the success of the Company
Section 172 of the Companies Act 2006 requires the directors to
act in a way that they consider, in good faith, would be most
likely to promote the success of the Company for the benefits of
its members as a whole, and in doing so have regard (amongst other
matters) to:
- the most likely consequences of any decision in the long term;
- the interest of the Company's employees;
- the need to foster the Company's business relationships with suppliers, customers and others;
- the impact of the Company's operations on the community and the environment;
- the desirability of the Company maintaining a reputation for
high standards of business conduct; and
- the need to act fairly between the members of the Company.
The Board confirms that, during the year, it has had regard to
the matters set out above. Further details as to how the directors
have fulfilled their duties are set out below and in the Governance
Report within the Annual Report which in particular, expands on
directors' duties and stakeholder liaison.
Business ethics and human rights
The Board is respectful of the Company's long history, and
considers the long-lasting impact of it decisions. We are committed
to conducting our business ethically and responsibly, and treating
employees, customers, suppliers and shareholders in a fair, open
and honest manner. As a business, we receive audits by both our
independent auditors and by our customers and we look to source
from suppliers who share our values. We encourage our employees to
provide feedback on any issues they are concerned about and have a
whistle-blowing policy that gives our employees the chance to
report anything they believe is not meeting our required
standards.
The Group is similarly committed to conducting our business in a
way that is consistent with universal values on human rights and
complying with the Human Rights Act 1998. The Group gives
appropriate consideration to human rights issues in our approach to
supply chain management, overseas employment policies and
practices. Where appropriate, we support community partnering.
Employees
The quality and commitment of our people has played a major role
in our business success. This has been demonstrated in many ways,
including improvements in customer satisfaction, the development of
our product lines and the flexibility they have shown in adapting
to changing business requirements. Employee performance is aligned
to the achievement of goals set within each subsidiary and is
rewarded accordingly. Employees are encouraged to use their skills
to best effect and are offered training either externally or
internally to achieve this. As a global business, the Group fully
recognises and seeks to harness the benefits of diversity within
its work force. The Group is grateful to its employees for
continuing to come to work in what is a worrying time for
themselves and their families.
Environment
The Group's policy with regard to the environment is to
understand and effectively manage the actual and potential
environmental impact of our activities. Operations are conducted
such that we comply with all legal requirements relating to the
environment in all areas where we carry out our business. The Group
continuously looks for ways to harness energy reduction
(electricity and gas) and water. In 2019, the Company installed a
190KW solar system on its UK premises, this green energy will
provide 25% of the UK's current electricity requirements. During
the period of this report the Group has not incurred any fines or
penalties or been investigated for any breach of environmental
regulations.
Social and community matters
We recognise our responsibility to work in partnership with the
communities in which we operate and we encourage active employee
support for their community in particular, in aid of technical
awareness and training. During the year, we participated in a
number of education events encouraging interest in engineering in
young people. It is our policy not to provide political
donations.
Consolidated income statement for the year ended 31st December
2019 (audited)
2019 2018
GBP'000 GBP'000
Revenue 33,433 35,718
Changes in inventories of finished goods and work
in progress 959 1,229
Raw materials and consumables used (17,986) (19,677)
Employee benefits costs (8,530) (8,300)
Depreciation and amortisation expense (1,236) (788)
Other expenses (4,737) (4,940)
Other operating income 318 -
--------------------------------------------------- ----------- -----------
Profit from operations 2,221 3,242
Finance expense (477) (227)
Finance income 2 2
--------------------------------------------------- ----------- -----------
Profit before tax 1,746 3,017
Tax expense (397) (788)
--------------------------------------------------- ----------- -----------
Profit for the year 1,349 2,229
--------------------------------------------------- ----------- -----------
Profit attributable to:
Owners of the parent 1,360 2,178
Non-controlling interests (11) 51
--------------------------------------------------- ----------- -----------
1,349 2,229
--------------------------------------------------- ----------- -----------
Basic and diluted earnings per share 94.44p 151.25p
--------------------------------------------------- ----------- -----------
1. The Group has initially applied IFRS 16 at 1st January 2019
using the modified retrospective approach. Under this approach,
comparative information is not re-stated and the cumulative effect
of initially applying IFRS 16 is recognised in retained earnings at
the date of initial application.
Consolidated statement of comprehensive income for the year
ended 31st December 2019 (audited)
2019 2018
GBP'000 GBP'000
Profit for the year 1,349 2,229
Items that will not be reclassified subsequently
to profit or loss
Net pension remeasurement gain on post employment
benefits 178 76
Items that may be reclassified subsequently to
profit or loss
Foreign exchange (losses)/gains on re-translation
of overseas operations (323) 206
--------------------------------------------------- -------- --------
Other comprehensive income for the year (145) 282
Total comprehensive income for the year 1,204 2,511
--------------------------------------------------- -------- --------
Total comprehensive income attributable to:
Owners of the parent 1,231 2,481
Non-controlling interests (27) 30
--------------------------------------------------- -------- --------
1,204 2,511
--------------------------------------------------- -------- --------
Consolidated balance sheet at 31st December 2019 (audited)
2019 2018
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 6,824 6,232
Intangible assets 48 61
Rights of use assets (see note below) 278 -
Total non-current assets 7,150 6,293
Current assets
Inventories 8,573 7,872
Trade and other receivables 5,697 6,820
Cash and cash equivalents 1,679 2,313
-------------------------------------------------- -------- --------
Total current assets 15,949 17,005
-------------------------------------------------- -------- --------
Total assets 23,099 23,298
-------------------------------------------------- -------- --------
Liabilities
Current liabilities
Bank overdraft 1,016 832
Trade and other payables 3,808 5,493
Other financial liabilities 2,163 1,870
Corporation tax liability 19 249
-------------------------------------------------- -------- --------
Total current liabilities 7,006 8,444
Non-current liabilities
Financial liabilities 1,384 1,256
Deferred income tax liability 360 265
-------------------------------------------------- -------- --------
Total non-current liabilities 1,744 1,521
-------------------------------------------------- -------- --------
Total liabilities 8,750 9,965
-------------------------------------------------- -------- --------
Total net assets 14,349 13,333
-------------------------------------------------- -------- --------
Share capital 360 360
Capital reserve 257 257
Foreign exchange reserve (6) 301
Retained earnings 14,084 12,734
-------------------------------------------------- -------- --------
Total equity attributable to the shareholders of
the parent 14,695 13,652
Non-controlling interests (346) (319)
-------------------------------------------------- -------- --------
Total equity 14,349 13,333
-------------------------------------------------- -------- --------
1. The Group has initially applied IFRS 16 at 1st January 2019
using the modified retrospective approach. Under this approach,
comparative information is not re-stated and the cumulative effect
of initially applying IFRS 16 is recognised in retained earnings at
the date of initial application.
Consolidated cash flow statement for the year ended 31st
December 2019 (audited)
2019 2018
GBP'000 GBP'000
Operating activities
Net profit 1,349 2,229
Adjustments for:
Depreciation and amortisation 1,236 788
Foreign exchange (losses)/gains (255) 158
Finance income (2) (2)
Finance expense 477 227
Loss on sale of land and buildings, plant, machinery
and motor vehicles (12) 15
Adjustment in respect of defined benefits scheme 93 158
Income tax expense 397 788
Income taxes paid (451) (871)
------------------------------------------------------ -------- --------
1,483 1,261
------------------------------------------------------ -------- --------
Operating profit before changes in working capital
and provisions 2,832 3,490
Decrease/(increase) in trade and other receivables 1,044 (580)
Increase in inventories (701) (1,441)
(Decrease)/increase in trade and other payables (1,499) 977
(1,156) (1,044)
------------------------------------------------------ -------- --------
Cash generated from operations 1,676 2,446
Investing activities
Purchases of property, plant, machinery and motor
vehicles and intangible assets (1,660) (1,767)
Sale of land and buildings, plant, machinery and
motor vehicles 27 32
Interest received 2 2
------------------------------------------------------ -------- --------
(1,631) (1,733)
Financing activities
Proceeds from long term borrowings 728 792
Repayment of borrowings (459) (349)
Repayment of hire purchase creditors (281) (276)
Repayment of lease liabilities (210) -
Bank interest paid (426) (198)
Lease interest paid (48) -
Hire purchase interest paid - (29)
Dividends paid (167) (153)
------------------------------------------------------ -------- --------
(863) (213)
------------------------------------------------------ -------- --------
(Decrease)/increase in cash and cash equivalents (818) 500
Cash and cash equivalents, beginning of period 1,481 981
------------------------------------------------------ -------- --------
Cash and cash equivalents, end of period 663 1,481
------------------------------------------------------ -------- --------
Consolidated statement of changes in equity for the year ended
31st December 2019 (audited)
Foreign Non-
Share Capital Exchange Retained Controlling Total
Capital Reserve Reserve Earnings Total Interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1st January
2018 360 257 74 10,633 11,324 (349) 10,975
Comprehensive income
Profit - - - 2,178 2,178 51 2,229
Other comprehensive
income
Net pension remeasurement
gain recognised directly
in equity - - - 76 76 - 76
Foreign exchange losses
on re-translation of
overseas subsidiaries
consolidated operations - - 227 - 227 (21) 206
--------------------------- ---------- ---------- ---------- ----------- -------- ------------- ---------
Total other comprehensive
income - - 227 76 303 (21) 282
Total comprehensive
income - - 227 2,254 2,481 30 2,511
--------------------------- ---------- ---------- ---------- ----------- -------- ------------- ---------
Transactions with owners
Dividends - - - (153) (153) - (153)
--------------------------- ---------- ---------- ---------- ----------- -------- ------------- ---------
Total transactions with
owners - - - (153) (153) - (153)
--------------------------- ---------- ---------- ---------- ----------- -------- ------------- ---------
Balance at 1st January
2019 360 257 301 12,734 13,652 (319) 13,333
Comprehensive income
Profit - - - 1,360 1,360 (11) 1,349
Other comprehensive
income
Net pension remeasurement
gain recognised directly
in equity - - - 178 178 - 178
Foreign exchange gains
on re-translation of
overseas subsidiaries
consolidated operations - - (307) - (307) (16) (323)
--------------------------- ---- ---- -------- ------- -------- ------- --------
Total other comprehensive
income - - (307) 178 (129) (16) (145)
Total comprehensive
income - - (307) 1,538 1,231 (27) 1,204
--------------------------- ---- ---- -------- ------- -------- ------- --------
Transactions with owners
Dividends - - - (167) (167) - (167)
Total transactions with
owners - - - (167) (167) - (167)
--------------------------- ---- ---- -------- ------- -------- ------- --------
Balance at 31st December
2019 360 257 (6) 14,084 14,695 (346) 14,349
--------------------------- ---- ---- -------- ------- -------- ------- --------
1. EARNINGS PER SHARE AND DIVIDS
Both the basic and diluted earnings per share have been
calculated using the net results attributable to shareholders of
Braime Group PLC as the numerator.
The weighted average number of outstanding shares used for basic
earnings per share amounted to 1,440,000 shares (2018 - 1,440,000).
There are no potentially dilutive shares in issue.
Dividends paid 2019 2018
GBP'000 GBP'000
Equity shares
Ordinary shares
Interim of 8.00p (2018 - 7.10p) per share paid
on 17th May 2019 38 34
Interim of 3.60p (2018 - 3.50p) per share paid
on 18th October 2019 17 17
------------------------------------------------ -------- --------
55 51
------------------------------------------------ -------- --------
'A' Ordinary shares
Interim of 8.00p (2018 - 7.10p) per share paid
on 17th May 2019 77 68
Interim of 3.60p (2018 - 3.50p) per share paid
on 18th October 2019 35 34
------------------------------------------------ -------- --------
112 102
------------------------------------------------ -------- --------
Total dividends paid 167 153
------------------------------------------------ -------- --------
An interim dividend of 8.00p per Ordinary and 'A' Ordinary share
will be paid on 5th June 2020.
2. SEGMENTAL INFORMATION
Central Manufacturing Distribution Total
2019 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External - 3,416 30,017 33,433
Inter Company 2,104 3,440 6,224 11,768
--------------------------------- -------- -------------- ------------- --------
Total 2,104 6,856 36,241 45,201
--------------------------------- -------- -------------- ------------- --------
Profit
EBITDA 851 (244) 2,850 3,457
Finance costs (305) (27) (145) (477)
Finance income - - 2 2
Depreciation and amortisation (607) (18) (611) (1,236)
Tax expense (114) 39 (322) (397)
(Loss)/profit for the period (175) (250) 1,774 1,349
--------------------------------- -------- -------------- ------------- --------
Assets
Total assets 5,529 3,657 13,913 23,099
Additions to non current assets 1,138 76 607 1,821
Liabilities
Total liabilities 852 1,768 6,130 8,750
Central Manufacturing Distribution Total
2018 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External - 4,291 31,427 35,718
Inter Company 695 3,891 6,452 11,038
--------------------------------- -------- -------------- ------------- --------
Total 695 8,182 37,879 46,756
--------------------------------- -------- -------------- ------------- --------
Profit
EBITDA 387 187 3,456 4,030
Finance costs (116) (36) (75) (227)
Finance income - - 2 2
Depreciation (464) - (324) (788)
Tax expense (19) (55) (714) (788)
(Loss)/profit for the period (212) 96 2,345 2,229
--------------------------------- -------- -------------- ------------- --------
Assets
Total assets 5,009 3,202 15,087 23,298
Additions to non current assets 650 - 1,149 1,799
Liabilities
Total liabilities 3,713 2,127 4,125 9,965
3. BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU), IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have
been prepared under the historical cost convention. The accounting
policies adopted are consistent with those of the annual financial
statements for the year ended 31st December 2019 as described in
those financial statements.
4. ANNUAL GENERAL MEETING
At the time of writing, the UK Government has prohibited public
gatherings of more than two people and non-essential travel, save
in certain limited circumstances. In light of these measures, the
2020 AGM will be run as a closed meeting and shareholders will not
be able to attend in person. The Company will make arrangements
such that the legal requirements to hold the meeting can be
satisfied through the attendance of a minimum number of people and
the format of the meeting will be purely functional.
The Annual General Meeting of the members of the company will be
held at the registered office of the company at Hunslet Road,
Leeds, LS10 1JZ on Monday 29th June 2020 at 11.45am. The annual
report and financial statements will be sent to shareholders by 1st
June 2020 and will also be available on the company's website (
www.braimegroup.com ) from that date.
5. THE ANNOUNCEMENT
The financial information set out in this announcement does not
constitute statutory accounts as defined by section 434 of the
Company Act 2006. The financial information for the year ended 31st
December 2019 has been extracted from the Group's financial
statements upon which the auditor's opinion is unqualified, does
not include reference to any matters to which they wish to draw
attention by way of emphasis without qualifying their report, and
does not include any statement under section 498 of the Companies
Act 2006. Statutory accounts for the year ended 31st December 2018
have been delivered to the Registrar of Companies, and those for
2019 will be delivered in due course.
6. EVENTS AFTER THE REPORTING PERIOD
The Coronavirus (Covid-19) pandemic, which began as an outbreak
in China in January 2020, very quickly spread across to Europe and
the rest of the world and is affecting all businesses for an
indeterminate period. In common with all other businesses in its
sector, the Group's trading subsidiaries in all locations have been
impacted by the pandemic.
At the date of approval of the financial statements it has not
been possible to quantify or ascertain with any certainty the
financial impact of Covid-19. As it is a non-adjusting event
occurring after the year end, no adjustments have been made to any
figures in the financial statements as a result of the
pandemic.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UUVWRRVUVARR
(END) Dow Jones Newswires
May 12, 2020 05:00 ET (09:00 GMT)
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