TIDMBRAM
RNS Number : 2834A
Brammer PLC
18 February 2014
FROM HUDSON SANDLER FOR
BRAMMER
PRESS RELEASE:
18 February 2014
Brammer plc
("Brammer" or the "Group")
PRELIMINARY RESULTS
CONTINUED PROGRESS IN DIFFICULT MARKETS
DELIVERED GBP60 MILLION OF VALIDATED COST SAVINGS TO OUR
CUSTOMERS
Brammer, the leading pan-European added value distributor of
industrial maintenance, repair and overhaul products, today
announces its preliminary results for the year ended 31 December
2013.
Financial Highlights
-- Total group revenue up 1.9% to GBP651.9 million (2012: GBP639.6 million).
-- Gross margin up 100 basis points to 31.5% (2012: 30.5%).
-- Operating profit (pre amortisation of acquired intangibles
("amortisation") and acquisition related costs) increased by 6.7%
to GBP39.8 million (2012: GBP37.3 million*).
-- Operating margins (pre amortisation and acquisition related
costs) improved from 5.8% to a new high of 6.1%.
-- Profit before tax (pre amortisation and acquisition related
costs) increased by 4.4% to GBP35.4 million (2012: GBP33.9
million*).
-- Profit before tax increased by 25.6% to GBP32.9 million (2012: GBP26.2 million*).
-- Cash flow from operating activities increased by 80% to
GBP45.5 million (2012: GBP25.3 million*).
-- $100 million of additional long term funding was obtained during the year.
-- EPS (pre amortisation and acquisition related costs)
increased by 2.8% to 22.1p (2012: 21.5p*).
-- Dividend up 8.5% to 10.2p (2012: 9.4p) reflecting the Board's
confidence in the outlook for the business.
Operational Highlights**
-- Continued successful execution of organic growth strategy:
- Key Account sales per working day growth of 8.7%; Key Account
sales, including Buck & Hickman, now represent 54.6% of
revenues (2012: 50.0%). A further 12 contracts won during the year
with total potential incremental revenues worth in excess of EUR100
million per annum.
- Insite(TM) sales growth of 13.0% with a net 56 new locations established.
- Strong revenue growth of 7.1% overall in Tools and General
Maintenance, with 35.7% growth in continental Europe.
- Key Account revenues from Food and Drink grew by 13.2%, Metals
by 19.4% and Fast Moving Consumer Goods by 9.0%, demonstrating the
group's resilience in difficult economic conditions.
- Overall Brammer delivered a record GBP60.0 million (2012:
GBP51.5 million) of customer validated cost savings to our
customers.
-- Since the year end, the acquisition of Lönne Holding AS was
completed in January 2014 - a leading distributor of OEM and MRO
industrial products operating from 15 locations in Scandinavia and
Finland.
* prior year results restated to reflect retrospective
application of IAS 19R - Employee Benefits.
** at constant currency
Current Trading and Outlook
Ian Fraser, Chief Executive said:
"In 2013 we continued to gain market share, driven by the
provision of exceptional value and service to our customers, and
further investment in our long term growth strategy. Our European
Key Account and Insite(TM) strategy continued to produce
significant growth, against a challenging market backdrop, with Key
Account revenues up 8.7%, representing nearly 55% of sales. Our
launch of the full Tools and General Maintenance range of products
on the continent resulted in growth of 35.7%; the established
foundation of supplier relationships and expertise will enable us
to enjoy significant future growth of this product range.
There were some signs of improvement in our markets as the year
drew to a close, and we are cautiously optimistic that this modest
improvement will continue in 2014. The first six weeks of the New
Year have continued the positive trend of the final quarter. Whilst
the pace of economic recovery in Europe remains uncertain, our
growth drivers will ensure we continue to perform well ahead of our
markets."
Enquiries: Brammer plc 0207 796 4133
Bill Whiteley, Chairman
Ian Fraser, Chief Executive
Paul Thwaite, Finance Director
Issued: Hudson Sandler 0207 796 4133
Andrew Hayes
Katie Matthews
BRAMMER PLC
PRELIMINARY ANNOUNCEMENT OF FINAL RESULTS
FOR YEAR ENDED 31 DECEMBER 2013
2013 PERFORMANCE REVIEW
Trading
Despite difficult market conditions across Europe, Brammer has
delivered a resilient and robust performance, with our strategic
focus driving profitable market share gains. During the year our
Key Account revenues grew by 8.7% as we continued to win market
share. However, our base business revenues, which broadly reflect
market conditions, declined by 9.3%.
Although we underestimated the challenges 2013 would present, we
have seen sequential improvement each quarter; sales per working
day ("SPWD") were down 4.9% year on year in January, improved
throughout the first half to reach growth of 1.0% in June, and
maintained an improving trend through the second half across many
of our regions. The group ended the year with encouraging quarter
four SPWD growth of 3.5% as our strategy of focusing on Key
Accounts, Insites(TM) and cross-selling initiatives continued to
build good market share gains.
At constant currency
First half* Second Full
half year
Growth rates (%) 2013
------------------------ -------
SPWD - external sales
UK 1.6 2.7 2.2
Germany -4.8 0.4 -2.4
France -3.1 -6.7 -4.7
Spain -3.5 12.3 3.8
Benelux -4.4 2.5 -1.3
Rest of Europe -5.6 -0.6 -3.1
Total group -1.7 1.4 -0.2
*H1 SPWD restated to exclude intercompany sales
Gross profit margin increased by 100 basis points compared to
the previous year, reaching 31.5%.
Operating profit (before amortisation of acquired intangibles
and acquisition related costs) increased 6.7% to GBP39.8 million
(2012: GBP37.3 million), supported by tight control of underlying
operating costs. Sales, distribution, and administrative costs
("SDA") (excluding amortisation and acquisition related costs)
increased by GBP8.0 million, GBP3.9 million of this being foreign
exchange impact with underlying cost increasing by 2.5%, with a
resulting return on sales of 6.1%, 30 basis points above the
previous year.
Pre-tax profit (before amortisation, acquisition related costs
and exceptional items) increased by 4.4% to GBP35.4 million (2012:
GBP33.9 million) with basic earnings per share (before
amortisation, acquisition related costs and exceptional items) up
2.8% to 22.1 pence per share (2012: 21.5 pence per share).
Our Market
Brammer is the leading pan-European added value distributor of
high quality industrial maintenance, repair and overhaul
products.
We are the authorised distributor of many of the world's leading
engineering component manufacturers. We supply Bearings, Mechanical
Power Transmission components, Fluid Power, and Tools and General
Maintenance products, together with engineering and associated
industrial services, to the maintenance repair and overhaul ("MRO")
market across Europe.
We estimate the European bearings market to be worth around EUR2
billion annually and we have approximately 10% share of that market
making us the clear European market leader.
In Mechanical Power Transmission we have approximately 3% of an
estimated EUR5 billion market. In Fluid Power we have just over 1%
of an estimated EUR10 billion European market and in our developing
product range of Tools and General Maintenance we have less than 1%
of what we now estimate to be a market worth at least EUR50 billion
across Europe.
Overall we estimate the market for our entire range of products
to be worth in excess of EUR65 billion, of which we currently have
a market share of just over 1%. We estimate our existing customer
base spends around EUR6.5 billion on our defined product range. Our
share of our customers' total spend is, therefore, less than 10%,
representing an opportunity to achieve significant growth through
cross-selling.
We are the European market leader but we operate in a highly
fragmented marketplace. Consequently our market share will not be a
constraint to growth for many years to come.
Growth and Synergies
Our growth drivers have served us well over the past ten years;
in 2013 we continued to invest in and benefit from our growth
strategy, prioritising Key Accounts, Product Range Extension,
Insites(TM) and segment-based marketing, and continue to achieve
growth ahead of the market.
Product Range Extension and Growth Drivers
In 2013 we introduced a new pan-European tools brand to market -
"Roebuck", which is now available across all of our European
businesses and is exclusively distributed by Brammer. Roebuck,
established over 150 years ago in the UK, is focused on hand tools,
cutting tools and tool storage offering a unique combination of
range, industrial quality and real value for money. The brand
provides a proven and effective solution for customers who need to
reduce their overall purchasing costs but without compromising on
quality or performance.
In line with our commitment to expanding our share of the
significant opportunity that the European Tools and General
Maintenance market offers, and further building on our success to
date, we launched the second edition of our European Tools and
General Maintenance catalogue. Printed in nine languages, in 13
editions and available in 16 countries, it now includes products in
16 sections from 84 leading brands.
We are also now well advanced on the development of the European
MRO catalogue. This will be the first time that a single
publication will have been produced for all of our MRO businesses
across continental Europe. It will be launched at the end of the
first quarter of 2014, will contain 1,000 pages, and will be
supported by pan-European agreements with over 50 of our
suppliers.
We have also now launched a transactional front end to all our
business websites around Europe. This development will make
purchasing from Brammer via our online channel easier for existing
customers, for Key Accounts (through our 'punch out' option) and,
eventually in 2014, for anyone whether they have an account or
simply a credit card. It also enables us to focus website visitors'
attention on our ability to meet their needs through all channel
options across the full breadth of MRO products including our now
extended Tools and General Maintenance, Personal Protection
Equipment and Health and Safety equipment ranges.
Another major growth driver, our Insite(TM) concept, is now
supported by our new Insite(TM) video and soon to be published
Insite(TM) brochure, which will help raise awareness of our
Insite(TM) offering, and will help our European sales team to
identify opportunities to offer more Insite(TM) solutions.
We have showcased our capabilities in Fluid Power through the
development of a Fluid Power brochure in nine languages. We have
also conducted European sales and marketing campaigns for our
leading bearings brands, and specific campaigns with selected
supplier partners for other MRO products.
Customer service
Finding substantial cost savings for our customers is
fundamental to the Brammer Value Proposition and we delivered over
6,380 individual customer validated cost saving actions providing a
financial benefit of over GBP60 million of signed off cost savings
to our customers in 2013. This year saw the development and
deployment of our Key Account cost savings database as both a
knowledge management and promotional communications tool. We also
produced a cost savings brochure specifically applied to the Metals
industry.
Our third annual Europe-wide customer satisfaction survey helped
us to better understand the views of our customers. Customer
service underpins all our growth drivers so understanding our
customers is key to our success. Telephone interviews were
conducted with 250 customers, and an online questionnaire was
completed by nearly 3,000 customers. We were able to see that
Brammer had performed well across all the key measurement areas.
Action plans were developed both on a pan-European basis and in
each country in those areas identified as opportunities for
improvement.
Our segmentation approach continues with the production of a
range of segment specific brochures covering the Packaging,
Pharmaceutical, and Metals industries. We are also extending this
segment specific approach to focus on opportunities to promote our
personal protection equipment ranges for Aerospace, Automotive,
Metals and Food and Drink segments.
Business area at 2013 constant currency rates (EUR1.25
: GBP1)
Quarter Quarter Quarter Quarter Annual Revenue
One Two Three Four 2013 2013
2013 2013 2013 2013
Growth rates (%) GBPm
-------------------------------------- ----------
SPWD
Total group -2.5 -0.9 -0.6 3.5 -0.2 633.3
Revenue
Bearings -14.0 -7.8 -4.6 2.6 -6.4 148.5
Non-bearings -2.4 4.1 3.6 2.3 1.8 484.8
of which Tools
& Maintenance 1.4 8.6 3.7 14.9 7.1 167.5
Key Accounts 1.9 11.3 8.9 12.9 8.7 345.5
Base business -12.7 -8.9 -5.6 -9.6 -9.3 287.8
Key Accounts
Whilst overall sales were broadly flat (down 0.2% at constant
currency), Key Accounts sales grew by 8.7%, with 12 new contracts
won during the year; Key Accounts now represent 54.6% of the
group's total sales. Our customers are focusing on cost control and
supplier consolidation in competitive markets, and our ability to
add value through the Brammer Value Proposition is proving highly
attractive and effective. Our Key Account pipeline is at a record
level and the prospects for further wins remain excellent.
We continued to focus our business on defensive segments, and
within Key Accounts increased our sales to the Food and Drink
segment by 13.2%, FMCG by 9.0% and Packaging by 7.7%. We also saw
continued recovery and further market share gains in the more
cyclical Metals sector with revenues up 19.4%.
Our Key Account contract with Alcoa now employs 71 dedicated
staff across 28 of their production sites in Europe, and is
generating revenues in excess of our expectations.
Insites(TM)
On a constant currency basis Insite(TM) sales grew by 13.0%,
with a further net 56 new locations established. The group now
operates a total of 383 Insites(TM) at year end. The value-added
services provided by the Insite(TM) model, inventory optimisation,
cost-saving projects and ready access to Brammer's product
specialists, continues to be an attractive proposition for our
customers.
Cross-selling
We continue to extend the product offering to reflect the full
Brammer range in every territory, and
cross-selling contributed strongly to the group's growth;
non-bearings sales grew by 1.8%, with Tools and General Maintenance
sales growth of 35.7% in continental Europe. Bearings sales
declined by 6.4% reflecting weak market demand and our high market
share in this product range.
We continued our evaluation of the potential growth opportunity
from industrial vending in the UK, Germany, France, Spain and
Poland. At year-end we had 153 machine installations and we remain
cautiously optimistic that the vending concept will provide good
future growth.
Acquisitions
In these challenging markets, many of our competitors are
finding business increasingly difficult and we are seeing more
opportunities to acquire businesses which would complement and
enhance the Brammer Group.
In January 2014, Brammer announced the acquisition of Lönne
Holding AS which provides a substantial extension to our existing
footprint in Norway and gives us a major presence in all of the key
Scandinavian markets. The acquisition provides Brammer with
cross-selling opportunities particularly in Tools and General
Maintenance, and a significant opportunity to service existing Key
Accounts in the Nordic region.
Synergies
Having acquired Buck & Hickman in September 2011, we are on
track to achieve our planned synergy benefits a year early.
Costs and Capabilities
We continued to work on increasing our spend with a smaller
number of key suppliers, thereby improving the level of marketing
support, pricing, and co-operation in the field received from those
suppliers. Gross margin improved by 100 basis points year on year
to 31.5%.
Sales distribution and administrative expense ("SDA") remained
tightly controlled. The underlying operating costs of the business
increased by 2.5% at constant currency.
Working capital
Our focus on working capital management in the year has resulted
in net cash inflow from operating activities of GBP45.5 million,
significantly higher than the GBP25.3 million in the prior
year.
Technology
To offer our customers the products they want at a price and
place that suits them we have to be masters of our data. Probably
the most significant Brammer technical development of the last
seven years took place in June, with the delivery by our Polish
central IT team of a new master data management system ("MDM").
This new system builds on, dramatically extends and replaces the
older MDM system. It provides us, for the first time, with the
ability to organise, cleanse, govern and distribute our data to any
channel we wish from a single point of control. This system will be
the cornerstone of everything that we do electronically with our
data, our customers' data and our suppliers' data. This internal
development was delivered at around one tenth of the cost of the
original system.
Our People
We are committed to recruiting and retaining the best people.
During the year Brammer's Distributed Learning programme
(e-learning) was updated with new product training modules and
enhanced functionality to provide a better learning experience in
nine languages. This training is a key element of Brammer's
employee induction programme.
The 2013 employee survey again provided positive feedback for
management and identified areas to focus upon to increase employee
engagement further still; Brammer already has best in class
employee engagement levels.
During 2013, the company undertook a graduate recruitment
programme, building upon the success of prior years. In 2014 we
shall introduce an additional scheme aimed at recruiting successful
graduates from other businesses to ensure that the best talent
available is being utilised to fuel our future growth. This
highlights our commitment to develop our people to ensure that
excellence comes as standard across all areas of the business and
that the delivery of best in class customer service is at the
forefront of everyone's minds.
Operating Performance and Key Performance Indicators
2013 2012(+)
GBPm GBPm
Revenue 651.9 639.6
Gross margin % 31.5% 30.5%
Gross profit 205.3 194.8
Sales, Distribution and Administration costs* (165.5) (157.5)
Operating profit* 39.8 37.3
Operating return on sales* 6.1% 5.8%
Finance expense - net (4.4) (3.4)
Profit before tax* 35.4 33.9
Cash generated from operations 45.5 25.3
Earnings per share* 22.1p 21.5p
Dividend per share 10.2p 9.4p
----------------------------------------------- -------- --------
*before amortisation, acquisition related costs and exceptional
items
(+) Prior year restated on adoption of IAS 19R - Employee
benefits
Key Performance Indicators and other measures
2013 2012
Group sales growth** -0.2% 16.2%
Organic SPWD growth** -0.2% 2.9%
Key Account SPWD growth** 8.7% 9.8%
Return on Capital employed 34.8% 34.3%
Net debt to EBITDA 1.15:1 1.3:1
Interest Cover 11.4 13.8
Stock turn 4.3 4.4
---------------------------- ------- ------
**at constant currency
Revenue
Revenue increased by 1.9%, of which the UK contributed 1.1%
growth and there was a 0.8% increase in continental Europe,
reflecting a beneficial currency exchange movement. At constant
exchange rates, revenue for the group was in line with the prior
year.
Gross profit
The gross profit for the year was GBP205.3 million (2012:
GBP194.8 million). Gross margin increased by 100 basis points to
31.5% (2012: 30.5%).
Sales, Distribution and Administrative Expense
Total reported SDA costs increased by GBP2.8 million from
GBP165.2 million in 2012 to GBP168.0 million; excluding
amortisation of acquired intangibles ("amortisation") and
acquisition related costs the increase was 5.1% from GBP157.5
million in 2012 to GBP165.5 million. SDA at constant currency
increased by 2.5%. A total expenditure of GBP4.8 million was
incurred in the year on strategic growth initiatives of which
GBP2.7 million was capitalised.
Operating profit
Operating profit (before amortisation and acquisition related
costs) increased by GBP2.5 million to GBP39.8 million in 2013 from
GBP37.3 million in 2012. Return on sales increased to 6.1% (2012:
5.8%).
Interest
The net finance expense for the year was GBP4.4 million (2012:
GBP3.4 million), which included GBP0.9 million (2012: GBP0.7
million) interest expense relating to the retirement benefit
liability. The effective interest rate on average net borrowings
was 4.5% (2012: 4.3%). EBIT (before amortisation, acquisition
related costs and exceptional items) covers interest by 11.4 times
(2012: 13.8 times).
Profit before tax
Profit before tax from continuing operations for the year was
GBP32.9 million (2012: GBP26.2 million). Profit before tax,
amortisation, acquisition related costs and exceptional items but
after finance expense was GBP35.4 million (2012: GBP33.9
million).
Tax
The overall tax charge for the year of GBP8.8 million (2012:
GBP6.8 million) consisted entirely of the current year charge of
GBP8.8 million. Current year tax represents an effective tax rate
of 26.7% which is higher than the expected rate of 23.25% primarily
as a result of charges arising from the differences in tax rates
across Europe of GBP0.6 million, disallowable acquisition costs of
GBP0.2 million and adjustments arising from tax losses in the year
on which no benefit was recognised of GBP0.9 million, offset by a
credit arising from a release of tax contingent liabilities of
GBP0.7 million and miscellaneous charges of GBP0.2 million.
Earnings per share
Basic earnings per share increased by 3.9p from 16.6p to 20.5p
in 2013. Earnings per share, before amortisation, acquisition
related costs and exceptional items, increased by 2.8% from 21.5p
in 2012 to 22.1p in 2013.
Dividend
The interim dividend for 2013 was increased by 13.3% to 3.4
pence per share. Given the growth in earnings the Board is now
proposing a 6.25% increase in the final dividend to 6.8 pence per
share. Total dividends for 2013 would then amount to 10.2 pence per
share which is a 8.5% increase over the prior year. At this level
the total dividend would be covered 2.2 times by earnings. Subject
to shareholder approval, the final dividend will be paid on 3 July
2014 to shareholders on the register at close of business on 6 June
2014.
Return on operating capital employed
The return on operating capital employed, based on operating
profit before amortisation, and acquisition related costs, was
34.8% (2012: 34.3%) for the total group.
Goodwill
Goodwill in the balance sheet stands at GBP91.2 million at the
end of the year (2012: GBP89.8 million), an increase of GBP1.4
million due to exchange movements on goodwill held in foreign
currencies.
Impairment reviews have been performed in accordance with IAS 36
and no impairment has been identified. The Czech business has
performed below expectations in 2013 and headroom in the impairment
calculation has reduced compared to the prior year; however,
management remain confident about the business's potential, have
instigated plans to improve performance and will continue to
monitor the business closely.
Trading during the year
Profit from operations before amortisation and acquisition
related costs, interest and tax ("underlying operating profit")
increased by 6.7% to GBP39.8 million (2012: GBP37.3 million), of
which GBP17.2 million was delivered in the first half and GBP22.6
million in the second half (see table below).
First half Second half Full year
2013 GBPm GBPm GBPm
Revenue 328.4 323.5 651.9
Gross profit 100.8 104.5 205.3
Underlying operating profit* 17.2 22.6 39.8
2012 GBPm GBPm GBPm
Revenue 331.1 308.5 639.6
Gross profit 98.3 96.5 194.8
Underlying operating profit* 18.6 18.7 37.3
* profit from operations before amortisation and acquisition
related costs, interest and tax.
In the first half, revenue decreased by GBP2.7 million
reflecting challenging market conditions across Europe, and
underlying operating profit decreased by GBP1.4 million. In the
second half, revenue increased by GBP15.0 million reflecting
improvements in the underlying market conditions, and underlying
operating profit increased by GBP3.9 million reflecting continued
focus on gross margin improvements and ongoing cost control.
Exchange rates had a beneficial impact on the year's results
increasing growth in revenue by 2.2% in revenue and underlying
operating profit by 2.3%.
Exceptional items
There were no exceptional items in 2013. In 2012 a pre-tax
operating exceptional charge of GBP6.4 million was recognised which
included headcount and other restructuring costs of GBP4.8 million,
a GBP0.8 million charge to write-down stock and a GBP0.8 million
charge to write-down software.
Amortisation of acquired intangibles and acquisition related
costs
Amortisation of acquired intangibles totalled GBP1.2 million
(2012: GBP1.3 million). Acquisition costs of GBP1.3 million were
incurred in 2013 primarily relating to the acquisition of Lönne
Holding AS completed on 7 January 2014.
Subsequent events
The group announced the acquisition of Lönne Holding AS on 7
January 2014. Lönne is a leading distributor of OEM and MRO
industrial products operating predominantly in Norway and Sweden
with further operations in Finland and Denmark.
Cash flow
2013 2012
GBPm GBPm
------------------------------------------------------ ------- -------
Cash inflow from operating activities before
working capital change 47.2 39.4
Working capital increase (1.7) (14.1)
------------------------------------------------------ ------- -------
Cash inflow from operating activities 45.5 25.3
Cash inflow from operating activities before
exceptional items and acquisition related costs 48.4 28.7
Cash outflow from acquisition related costs (0.7) -
Cash outflow from prior year exceptional items (2.2) (3.4)
------------------------------------------------------ ------- -------
Cash inflow from operating activities 45.5 25.3
------------------------------------------------------ ------- -------
Net capital expenditure (purchases net of disposals) (13.5) (8.9)
------- -------
Operational cash generation 32.0 16.4
Acquisitions (including net debt acquired) - (1.1)
Deferred consideration and earn out (4.2) (10.4)
Tax (7.5) (7.9)
Interest, dividends, pension obligations & other (16.4) (15.1)
Purchase of own shares (2.4) (1.1)
Net proceeds from issue of shares 0.1 0.1
------- -------
Decrease/(increase) in net debt 1.6 (19.1)
Opening net debt (53.8) (35.3)
Exchange (0.7) 0.6
Closing net debt* (52.9) (53.8)
======= =======
* total borrowings net of cash and cash equivalents.
Net debt reduced by GBP0.9 million from GBP53.8 million to
GBP52.9 million. At the year end, net debt/EBITDA stood at 1.15:1
times (2012: 1.3:1 times).
Net cash inflow from operating activities of GBP45.5 million
increased by GBP20.2 million from GBP25.3 million in 2012. This
inflow is after GBP0.7 million outflow of acquisition related
costs, and GBP2.2 million outflow (2012: GBP3.4 million) associated
with provision utilisation of exceptional items from prior years.
The operating cash inflow funded the payment of GBP4.2 million of
deferred consideration, GBP7.5 million of taxation payments and
GBP16.4 million for dividends, interest and pension obligations.
Net capital expenditure increased significantly from GBP8.9 million
to GBP13.5 million reflecting continued investment in software
development and strategic growth initiatives, together with
investment in two new National Distribution Centres ("NDC") (in
Netherlands and the Czech Republic). Average net borrowings in 2013
were GBP76.8 million compared to GBP62.8 million in 2012.
Pensions
The net pension liability relating to the defined benefit
pension schemes increased by GBP6.1 million to GBP27.8 million
(2012: GBP21.7 million). The principal factors contributing to this
increase were a GBP7.2 million net actuarial loss on the schemes
offset by GBP3.3 million of employer contributions. The principal
reason for the increase in the liabilities is the change in
financial assumptions, in particular the increase in inflation
expectations.
The main financial assumptions used were a discount rate of
4.45% (2012: 4.4%), a 3.3% (2012: 2.8%) rate of increase for
pensions in payment and a 2.7% (2012: 2.2%) rate of increase for
pensions in deferment. The charge recognised in the income
statement increased to GBP1.9 million (2012: GBP1.5 million)
including a GBP0.2 million higher net interest charge.
Financing and Covenants
The group is principally financed by a EUR100 million floating
rate revolving credit facility which can be drawn until it expires
on 30 June 2016. In addition to the revolving credit facility, GBP7
million of undrawn overdraft facilities are available. The amount
drawn under the revolving credit facility as at 31 December 2013
was GBP33.0 million (EUR39.7 million).
During the year, the group supplemented its existing borrowing
facilities with additional long-term funding by entering into a
$100m (or currency equivalent) private shelf facility. In June
2013, EUR20 million private placement notes were issued, and a
further issue of EUR20 million private placement notes was made in
July 2013. These private placement notes are unsecured, bear
interest at a fixed rate and mature in 2023. In January 2014, the
remaining facility was drawn down with a further issue of EUR35.4
million private placement notes with a term of seven years maturing
in January 2021.
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Operating Segments Review
Summary trading performance by segment at 2013 constant currency
rates (EUR1.25 : GBP1)
External RevenueGrowth SPWD** Operating Operating
Revenue Growth Profit* Profit
(like- for- growth*
like)
2013 2012 2013 2013 2013 2012 2013
GBPm GBPm % % GBPm GBPm %
UK(+) 293.3 286.1 2.5% 2.2% 21.0 18.1 16.0%
Germany(+) 112.1 114.8 -2.4% -2.4% 6.5 7.0 -7.1%
France 79.5 84.2 -5.6% -4.7% 4.2 4.2 -
Spain 42.7 41.1 3.9% 3.8% 4.7 4.1 14.6%
Benelux 50.3 51.0 -1.4% -1.3% 2.6 2.7 -3.7%
Eastern
Europe
& Other(+) 55.4 57.5 -3.7% -3.1% - 0.9 n/a
Total 633.3 634.7 -0.2% -0.2% 39.0 37.0 5.4%
------ ------ -------------- ------------- ----- ----- ----------
Exchange
effect*** 18.6 4.9 2.1% 2.1% 0.8 0.3 1.3%
------ ------ -------------- ------------- ----- ----- ----------
As reported 651.9 639.6 1.9% 1.9% 39.8 37.3 6.7%
====== ====== ============== ============= ===== ===== ==========
* operating profit before intangible amortisation, acquisition
related costs and exceptional items
** sales per working day
*** to reconcile results and analysis to actual exchange rates
for 2013 and 2012
(+) changes in reportable segments have been reflected in all
periods presented and are explained in note 2 below.
UK (including Iceland and Norway)
2009 2010 2011 2012* 2013*
SPWD growth -% -0.4 8.0 16.8 7.6 2.2
Key Account sales growth -% 3.5 12.2 22.4 7.2 8.6
Insite sales growth -% 29.3 17.4 24.5 2.2 9.6
Insite numbers 153 143 152 163 191
Customer signed off cost savings
-GBP'm 20.5 17.1 20.4 32.9 33.7
Bearings Growth -% -12.4 8.0 12.2 -1.6 -1.8
Non bearings
Mechanical Power Transmission
sales growth -% -6.8 7.8 7.5 -5.0 0.5
Fluid Power sales growth -% 16.0 11.1 20.3 -3.0 5.3
Tools and General Maintenance
(T&GM) sales growth -% 8.0 14.8 28.4 2.8 3.3
Key Accounts proportion of total
sales -% 56.7 57.3 62.5 67.7 71.6
Non Key Accounts proportion
of total sales -% 43.3 42.7 37.5 32.3 28.4
Bearings proportion of total
sales -% 22.3 22.1 20.6 12.4 11.9
T&GM as a proportion of total
sales -% 10.1 10.7 13.0 47.5 47.7
Fluid Power as a proportion
of total sales -% 20.0 20.4 19.9 12.0 12.3
* includes Buck & Hickman
Our largest operation, and the one where the Brammer development
strategy is most advanced, achieved SPWD growth of 2.2%, increasing
operating profit by 16.0% to GBP21.0 million.
Key Account sales grew by 8.6% in the year reflecting a five
year trend of continuous growth. Our continued success has meant
that over that period, the proportion of turnover which is Key
Accounts has increased by 14.9 percentage points and now represents
71.6% of turnover. We continued to win new accounts including
Siemens, Drax Power and Morrison Supermarkets. We have extended
numerous existing contracts and have successfully retendered our
Rolls-Royce contract, one of our largest customers, which has
secured this significant revenue stream for the medium term.
Our customer service value proposition continues to be
attractive to customers and we have utilised the enhanced
capabilities of the Key Account cost savings database to capture a
record GBP33.7 million signed off customer cost savings, GBP0.8
million above 2012 levels.
The number of full time and part time Insites(TM) now totals
191, 28 more than last year. The number of full time Insites(TM)
has grown by 25, reflecting 30 new locations and five closures of
existing locations. Three new locations were opened to service our
growing relationship with Kerry Foods doubling the number of
Insites(TM) in Ireland. As a result, sales through Insites(TM)
increased by 9.6%.
Bearing sales declined 1.8% reflecting a challenging market, but
our cross-selling initiatives continued to gain traction with year
on year growth in Tools and General Maintenance, Fluid Power and
Mechanical Power Transmission. A new mobile Centre of Excellence is
now actively engaged at customer sites to grow awareness of the
Tools and General Maintenance product range to drive growth.
Integration of the Buck & Hickman business has continued
successfully and ongoing synergy benefits continue to be ahead of
our original expectations.
Germany
2009 2010 2011 2012 2013
SPWD growth -% -30.8 13.4 19.2 0.0 -2.4
Key Account sales growth
-% -22.4 20.9 24.1 7.2 11.5
Insite sales growth -% -6.7 36.8 37.2 16.4 12.1
Insite numbers 12 20 37 47 54
Customer signed off cost
savings -GBP'm 0.5 5.4 9.4 7.9 12.7
Bearings Growth -% -38.1 9.7 14.7 -10.6 -10.6
Non bearings
Mechanical Power Transmission
sales growth -% -30.0 27.0 11.0 1.4 7.3
Fluid Power sales growth
-% -50.5 2.3 28.1 13.0 1.3
Tools and General Maintenance
(T&GM) sales growth -% -25.6 24.4 58.6 13.9 45.9
Key Accounts proportion of
total sales -% 22.8 24.1 26.8 30.5 35.3
Non Key Accounts proportion
of total sales -% 77.2 75.9 73.2 69.5 64.7
Bearings proportion of total
sales -% 33.3 32.0 31.6 28.5 26.0
T&GM as a proportion of total
sales -% 2.1 2.3 3.4 3.9 4.3
Fluid Power as a proportion
of total sales -% 18.1 16.2 17.9 20.5 22.2
SPWD declined by 2.4% in the year and trading profit declined by
7.1%. The sales decrease reflected challenging market conditions
during the year, especially in the Original Equipment Manufacturing
("OEM") sector. However the decline in sales bottomed out in the
first quarter, and the fourth quarter saw a return to growth of
2.2%.
Bearings sales declined 10.6% in the year reflecting the
challenging market, but our focus on product range extension saw a
1.4% growth in non-bearings products, including the Fluid Power and
Mechanical Power Transmission sectors. Although still a small
proportion of sales, significant growth of 45.9% in Tools and
General Maintenance reflects growing traction in this important
product range.
Key Accounts growth continued for the fourth consecutive year,
with the growth rate accelerating by 4.3 percentage points from
last year to 11.5%. We won eighteen new Key Accounts, and delivered
GBP12.7 million of signed off cost savings, GBP4.8 million more
than last year.
The number of Insite(TM) locations continues to increase and now
totals 54. We won an additional 11 part time Insites(TM) (those
locations where we have several regular clinics with the customers
staff each week), an increase of nearly a third. Double digit
Insite(TM) growth continued for the fourth year, at 12.1%.
France
2009 2010 2011 2012 2013
SPWD growth -% -14.6 11.1 14.2 3.5 -4.7
Key Account sales growth
-% -4.1 18.8 19.1 12.3 3.1
Insite sales growth -% -14.0 38.7 16.0 27.3 30.9
Insite numbers 20 22 31 39 45
Customer signed off cost
savings -GBP'm 2.0 2.6 3.8 2.6 4.5
Bearings Growth -% -18.5 6.1 9.2 -5.0 -8.4
Non bearings
Mechanical Power Transmission
sales growth -% -10.1 9.8 10.6 3.5 -9.4
Fluid Power sales growth
-% -7.2 28.0 25.6 14.6 1.5
Tools and General Maintenance
(T&GM) sales growth -% 21.8 84.4 32.7 16.5 39.8
Key Accounts proportion of
total sales -% 31.0 33.3 35.8 40.0 44.1
Non Key Accounts proportion
of total sales -% 69.0 66.7 64.2 60.0 55.9
Bearings proportion of total
sales -% 38.6 36.5 35.0 32.1 30.6
T&GM as a proportion of total
sales -% 2.4 4.0 4.6 5.2 7.6
Fluid Power as a proportion
of total sales -% 12.2 13.9 15.4 17.0 18.0
SPWD declined by 4.7%, whilst there was no change in operating
profit of GBP4.2 million. The SPWD decline was greatest in the
third quarter at 7.0% although the fourth quarter showed a marginal
improvement. Bearings sales declined by 8.4% in difficult economic
conditions and Key Account growth of 3.1% was disappointing. We won
new contracts with Unilever, ITW and Nestle Waters. Key Accounts
now represent 44.1% of sales.
The value of signed-off cost savings grew by GBP1.9 million as
regionally embedded cost savings champions enhance our capability
to deliver value to our customers. We also opened six Insites(TM)
driving significant revenue growth of 30.9%. Investment in the
Tools and General Maintenance product range produced sales growth
of 39.8%, including a successful introduction of the Roebuck brand
into the French market.
Spain
2009 2010 2011 2012 2013
SPWD growth -% -22.3 9.5 12.3 -0.3 3.8
Key Account sales growth
-% -4.2 19.5 28.5 15.3 19.5
Insite sales growth -% 27.6 22.0 46.3 31.8 56.0
Insite numbers 13 15 22 30 38
Customer signed off cost
savings -GBP'm 1.7 1.3 2.3 2.1 1.2
Bearings Growth -% -28.4 4.4 3.3 -10.1 3.3
Non bearings
Mechanical Power Transmission
sales growth -% -21.9 7.0 14.9 -4.9 -0.9
Fluid Power sales growth
-% -0.1 34.2 46.1 23.9 23.4
Tools and General Maintenance
(T&GM) sales growth -% 4.3 48.0 33.2 89.0 71.5
Key Accounts proportion of
total sales -% 25.0 26.8 31.2 36.4 40.6
Non Key Accounts proportion
of total sales -% 75.0 73.2 68.8 63.6 59.4
Bearings proportion of total
sales -% 43.4 41.2 37.9 34.1 32.6
T&GM as a proportion of total
sales -% 1.7 2.3 2.7 5.1 8.0
Fluid Power as a proportion
of total sales -% 7.3 8.9 11.6 14.3 16.4
SPWD increased by 3.8% and operating profit improved by 14.6%,
with pleasing progress in all of our growth drivers. Key Account
revenues now represent over 40% of sales, growing by 19.5%, our
fourth year of double digit growth. Further growth will be
augmented by new contract wins with Huhtamaki, Tyco and McBride
amongst others. We provided over GBP1.2 million of cost savings to
our Key Account customers. Insite(TM) sales growth of 56% was
driven in part by significant growth from Alcoa Insites(TM) as the
rollout of the Europe-wide project continues. Fourteen new
Insites(TM) were established, bringing the total, after closures,
to 38, almost tripling the number since 2009.
Our focus continued on Food and Drink (up 19.3%) as 129 customer
symposiums attracted customers in our target segments. Excellent
progress continued in product range extension, with sales of the
Tools and General Maintenance range up 71.5% and Fluid Power up
23.4%.
Benelux
2009 2010 2011 2012 2013
SPWD growth -% -20.0 10.7 12.8 7.5 -1.3
Key Account sales growth
-% -1.5 21.3 22.9 20.1 5.5
Insite sales growth -% 9.1 104.8 22.7 33.1 10.5
Insite numbers 6 8 9 16 17
Customer signed off cost
savings -GBP'm 0.1 1.2 1.1 1.1 2.1
Bearings Growth -% -25.3 3.0 8.7 3.6 -6.5
Non bearings
Mechanical Power Transmission
sales growth -% -7.3 16.3 10.3 0.5 -3.5
Fluid Power sales growth
-% 18.7 27.3 19.3 20.8 9.1
Tools and General Maintenance
(T&GM) sales growth -% -18.0 28.3 16.1 20.8 13.9
Key Accounts proportion of
total sales -% 22.5 24.5 27.3 32.1 34.3
Non Key Accounts proportion
of total sales -% 77.5 75.5 72.7 67.9 65.7
Bearings proportion of total
sales -% 57.0 52.6 50.7 48.9 46.2
T&GM as a proportion of total
sales -% 9.7 11.2 11.5 13.3 15.3
Fluid Power as a proportion
of total sales -% 7.3 8.3 8.8 9.7 10.7
SPWD in the Benelux countries decreased by 1.3%, due to a
slowdown in the Belgian MRO market. Operating profit has remained
broadly flat. We have succeeded in delivering GBP2.1 million worth
of cost savings to our customers, a significant increase over the
GBP1.1 million delivered over the previous three years. Our focus
on Tools and General Maintenance and Fluid Power has led to an
increase in their share of total sales. Key Accounts now represent
34.3% of total sales, and the number of Insites(TM) has more than
doubled in the past three years. We opened a new NDC in the
Netherlands, significantly increasing our capacity in this
segment.
Key Account SPWD growth in the Netherlands was 13.1% and in
Belgium decreased by 1.9%. We won new contracts with Colgate
Palmolive, PepsiCo and Unilever, among others. In the Netherlands
Tools and General Maintenance produced SPWD growth of 12.1% whilst
Fluid Power grew by 9.9%. In Belgium, SPWD through Insites(TM)
increased by 5.7%, and in the Netherlands by 15.6%. Tools and
General Maintenance sales in Belgium increased by 31.6%.
Eastern Europe and Other
2009 2010 2011 2012 2013
SPWD growth -% -7.7 18.7 18.8 -5.3 -3.1
Key Account sales growth
-% 1.1 45.9 36.6 9.4 12.0
Insite sales growth -% 5.4 27.1 6.0 15.8 13.3
Insite numbers 9 14 19 32 38
Customer signed off cost
savings -GBP'm 0.9 1.0 3.3 2.8 5.9
Bearings Growth -% -15.2 7.7 44.1 -22.6 -10.9
Non bearings
Mechanical Power Transmission
sales growth -% 20.7 30.5 12.2 -4.8 0.4
Fluid Power sales growth
-% 32.1 32.0 20.4 -1.1 -4.3
Tools and General Maintenance
(T&GM) sales growth -% 26.6 17.4 13.2 1.8 42.5
Key Accounts proportion of
total sales -% 18.8 17.1 23.7 29.7 34.8
Non Key Accounts proportion
of total sales -% 81.2 82.9 76.3 70.3 65.2
Bearings proportion of total
sales -% 49.8 44.6 44.1 37.8 34.8
T&GM as a proportion of total
sales -% 3.1 3.0 2.9 3.2 4.7
Fluid Power as a proportion
of total sales -% 13.9 15.2 15.3 16.7 16.5
In Eastern European and other businesses (comprising Poland, the
Czech Republic and Slovakia, Hungary and Italy) total SPWD declined
by 3.1%, whilst operating profit declined by GBP0.9 million.
Bearings sales declined, with Tools and General Maintenance and
Fluid Power sales becoming an increasing proportion of our business
over the past five years. Key Accounts continue to represent an
increasing proportion of total sales, with new contracts won with
Crown, Bosch and Mapei Group, among others. Key Accounts now
contribute more than one third of total sales. Tools and General
Maintenance growth has increased significantly, to 42.5%. Six new
Insites(TM) were opened, helping to generate Insite(TM) sales
growth of 13.3%. The number of Insites(TM) has now more than
quadrupled over the past four years. In 2013, cost savings to our
customers have more than doubled.
In Poland, SPWD increased by 3.2% and Key Account sales grew by
9%. In the Czech Republic and Slovakia, SPWD decreased by 19.7% due
to a significant slowdown in the OEM sector and a high level of
staff turnover leading to several lost contracts. Key Accounts
decreased by 6.7%, though Tools and General Maintenance sales
increased by 14.8%. We opened a new NDC in the Czech Republic,
which will result in cost savings and greater capacity and
logistical capability. In Hungary, the SPWD growth was 11.6%, with
Key Accounts sales growth of 31.8%. In Italy, SPWD decreased by
3.8%, whilst Key Accounts sales grew by 24.8% and continue to offer
opportunities for significant growth.
The Future
In 2013 we continued to gain market share, driven by the
provision of exceptional value and service to our customers, and
further investment in our long-term growth strategy. Our European
Key Account and Insite(TM) strategy continued to produce
significant growth, against a challenging market backdrop, with Key
Account revenues up 8.7%, representing nearly 55% of sales. Our
launch of the full Tools and General Maintenance range of products
on the continent resulted in growth of 35.7%; the established
foundation of supplier relationships and expertise will enable us
to enjoy significant future growth of this product range.
There were some signs of improvement in our markets as the year
drew to a close, and we are cautiously optimistic that this modest
improvement will continue in 2014. The first six weeks of the New
Year have continued the positive trend of the final quarter. Whilst
the pace of economic recovery in Europe remains uncertain, our
growth drivers will ensure we continue to perform well ahead of our
markets.
Ian Fraser
18 February 2014
Brammer Preliminary results announcement
Consolidated income statementfor the year ended 31 December
2013
Year to Year to
31 December 31 December
2013 2012*
Note GBPm GBPm
Continuing operations
Revenue 2 651.9 639.6
Cost of sales (446.6) (444.8)
Gross profit 205.3 194.8
------------------------------------------------ ------ ------------- -------------
Distribution costs (165.5) (163.9)
Amortisation of acquired intangibles (amortisation")
and acquisition related costs (2.5) (1.3)
Total sales, distribution
and administrative costs (168.0) (165.2)
------------------------------------------------ ------ ------------- -------------
Operating profit 2 37.3 29.6
Operating profit before amortisation, acquisition
related costs and exceptional items 39.8 37.3
Amortisation and acquisition related costs (2.5) (1.3)
Exceptional items - (6.4)
------------- -------------
Operating profit 2 37.3 29.6
------------- -------------
Finance expense (4.5) (3.5)
Finance income 0.1 0.1
------------------------------------------------ ------ ------------- -------------
Profit before tax 32.9 26.2
Profit before tax before amortisation, acquisition
related costs and exceptional items 35.4 33.9
Amortisation and acquisition related costs (2.5) (1.3)
Exceptional items 4 - (6.4)
------------- -------------
Profit before tax 32.9 26.2
------------- -------------
Taxation (8.8) (6.8)
Profit for the year attributable
to equity shareholders 2 24.1 19.4
------------------------------------------------ ------ ------------- -------------
Earnings per share 3
Basic 20.5p 16.6p
Diluted 19.9p 16.0p
Earnings per share - pre amortisation, acquisition
related costs and exceptional items
3
Basic 22.1p 21.5p
Diluted 21.4p 20.8p
------------------------------------------------ ------ ------------- -------------
*Prior year restated on adoption of IAS 19R 'Employee
Benefits'.
Brammer
Consolidated statement of comprehensive income for the year
ended 31 December 2013
2013 2012*
GBPm GBPm
Profit for the year 24.1 19.4
Other comprehensive (expense)/income
Items that are not subsequently reclassified
to the income statement
Actuarial losses on pension schemes (6.1) (5.5)
------ ------
Items that may be subsequently reclassified
to the income statement
Net exchange differences on translating
foreign operations 0.9 (2.4)
Effective portion of changes in fair value
of cash flow hedges 0.1 (0.2)
------ ------
1.0 (2.6)
------ ------
Other comprehensive expense for the year,
net of tax (5.1) (8.1)
Total comprehensive income for the year 19.0 11.3
---------------------------------------------- ------ ------
Items in the statement above are disclosed net of tax.
*Prior year restated on adoption of IAS 19R 'Employee
Benefits'.
Brammer
Consolidated balance sheetas at 31 December 2013
2013 2012*
Notes GBPm GBPm
Assets
Non-current assets
Goodwill 91.2 89.8
Acquired intangible assets 9.2 10.4
Other intangible assets 13.1 8.9
Property, plant and equipment 17.9 14.8
Deferred tax assets 10.9 8.9
142.3 132.8
------------------------------------ ------ -------- --------
Current assets
Inventories 108.6 97.7
Trade and other receivables 112.5 109.1
Cash and cash equivalents 6 17.7 2.2
238.8 209.0
------------------------------------ ------ -------- --------
Liabilities
Current liabilities
Financial liabilities - borrowings 6 (4.0) (3.2)
Trade and other payables (137.3) (121.9)
Provisions (0.6) (0.7)
Deferred consideration (0.3) (4.2)
Current tax liabilities (5.4) (4.7)
(147.6) (134.7)
------------------------------------ ------ -------- --------
Net current assets 91.2 74.3
Non-current liabilities
Financial liabilities - borrowings 6 (66.6) (52.8)
Deferred tax liabilities (9.5) (8.8)
Derivative financial instruments (0.2) (0.3)
Provisions - (2.0)
Deferred consideration (0.2) (0.5)
Retirement benefit obligations (27.8) (21.7)
(104.3) (86.1)
------------------------------------ ------ -------- --------
Net assets 129.2 121.0
------------------------------------ ------ -------- --------
Shareholders' equity
Share capital 23.6 23.5
Share premium 18.2 18.2
Translation reserve (0.2) (1.1)
Cash flow hedging reserve (0.1) (0.2)
Retained earnings 87.7 80.6
Total equity 7 129.2 121.0
------------------------------------ ------ -------- --------
*Prior year restated on adoption of IAS 19R 'Employee
Benefits'.
Brammer
Consolidated statement of changes in equityfor the year ended 31
December 2013
Share Share Treasury Cash Translation Retained
flow
Capital Premium Shares Hedging Reserve Earnings Total
Reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2012 23.4 18.2 (0.2) - 1.3 74.9 117.6
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Profit for the year* - - - - - 19.4 19.4
Other comprehensive
expense* - - - (0.2) (2.4) (5.5) (8.1)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Total comprehensive
income - - - (0.2) (2.4) 13.9 11.3
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Transactions with owners
Shares issued during
the year 0.1 - - - - - 0.1
Purchase of own shares - - (1.1) - - - (1.1)
Transfer on vesting
of own shares - - 1.2 - - (1.2) -
Share-based payments - - - - - 2.0 2.0
Tax credit on share
performance plans - - - - - 1.3 1.3
Dividends - - - - - (10.2) (10.2)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Total transactions
with owners 0.1 - 0.1 - - (8.1) (7.9)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Movement in year 0.1 - 0.1 (0.2) (2.4) 5.8 3.4
---------------------------- -------- -------- --------- --------- ------------ --------- -------
At 31 December 2012 23.5 18.2 (0.1) (0.2) (1.1) 80.7 121.0
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Profit for the year - - - - - 24.1 24.1
Other comprehensive
expense - - - 0.1 0.9 (6.1) (5.1)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Total comprehensive
income - - - 0.1 0.9 18.0 19.0
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Transactions with owners
Shares issued during
the year 0.1 - - - - - 0.1
Purchase of own shares - - (2.4) - - - (2.4)
Transfer on vesting
of own shares - - 2.3 - - (2.3) -
Value of employee services - - - - - 2.7 2.7
Tax credit on share
performance plans - - - - - 0.3 0.3
Dividends - - - - - (11.5) (11.5)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Total transactions
with owners 0.1 - (0.1) - - (10.8) (10.8)
---------------------------- -------- -------- --------- --------- ------------ --------- -------
Movement in year 0.1 - (0.1) 0.1 0.9 7.2 8.2
---------------------------- -------- -------- --------- --------- ------------ --------- -------
At 31 December 2013 23.6 18.2 (0.2) (0.1) (0.2) 87.9 129.2
---------------------------- -------- -------- --------- --------- ------------ --------- -------
*Prior year restated on adoption of IAS 19R 'Employee
Benefits'.
Brammer
Consolidated cash flow statement for the year ended 31 December
2013
2013 2012*
Note GBPm GBPm
Cash generated from operations 5 45.5 25.3
Interest received 0.1 0.1
Interest paid (2.7) (2.6)
Tax paid (7.5) (7.9)
Funding of pension schemes less pension
expense included in operating profit (2.3) (2.4)
Cash generated from operating activities 33.1 12.5
--------------------------------------------------- ----- ------- -------
Cash generated from operating activities
before exceptional items 36.0 15.9
Cash outflow from acquisition related costs (0.7) -
Cash outflow from exceptional items (2.2) (3.4)
--------------------------------------------------- ----- ------- -------
Cash generated from operating activities 33.1 12.5
--------------------------------------------------- ----- ------- -------
Cash flows from investing activities
Acquisition of businesses (net of cash
acquired) - (1.1)
Deferred consideration paid on prior acquisitions (4.2) (10.4)
Proceeds from sale of property, plant and
equipment 0.2 0.2
Purchase of property, plant and equipment (7.0) (4.7)
Additions to other intangible assets (6.7) (4.4)
Net cash used in investing activities (17.7) (20.4)
--------------------------------------------------- ----- ------- -------
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital 0.1 0.1
Net proceeds from issue of private placement 34.0 -
Net (repayment)/drawdown of loans under principal
financing facility (20.3) 5.9
Net repayment of finance leases - (0.1)
Dividends paid to shareholders (11.5) (10.2)
Purchase of own shares (2.4) (1.1)
Net cash absorbed from financing activities (0.1) (5.4)
--------------------------------------------------- ----- ------- -------
Net increase/(decrease) in cash and cash
equivalents 15.3 (13.3)
Exchange gain/(loss) on cash and cash equivalents 0.2 (0.3)
Net cash at beginning of year 2.0 15.6
Net cash at end of year 17.5 2.0
--------------------------------------------------- ----- ------- -------
Cash and cash equivalents 17.7 2.2
Overdrafts (0.2) (0.2)
Net cash at end of year 17.5 2.0
--------------------------------------------------- ----- ------- -------
*Prior year restated on adoption of IAS 19R 'Employee
Benefits'.
Brammer Accounting policies
General information
Brammer plc is a public limited company incorporated and
domiciled in the UK, and listed on the London Stock Exchange. The
address of the registered office is disclosed in note 9 below.
The consolidated financial statements comprise the company and
its subsidiaries (together referred to as the "group") and were
approved for issue by a duly appointed and authorised committee of
the Board on 18 February 2014. The statements are presented in UK
sterling.
Basis of preparation
The financial information set out in this Preliminary Results
announcement does not comprise the group's statutory financial
statements for the years ending 31 December 2013 and 2012 within
the meaning of Section 434 of the Companies Act 2006.
These 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 financial statements have been prepared
on a going concern basis under the historical cost convention, as
modified by financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss under
IFRS.
The independent auditors' report on these accounts is
unqualified, does not contain an emphasis of matter paragraph, and
does not contain any statements under section 498 (2) or (3) of the
Companies Act 2006.
Accounting policies
Except for the adoption of IAS 19R - 'Employee Benefits' - the
principal accounting policies adopted in the preparation of these
consolidated financial statements are unchanged from those applied
in the preparation of the 2012 statements, and will be set out in
full in the 2013 published financial statements. These policies
have been consistently applied to all the years presented
IAS 19R - 'Employee benefits' - has been adopted with effect
from 1 January 2013. The change in the accounting standard has been
adopted retrospectively and the comparative amounts have been
restated. Under IAS 19R the separate calculations of an interest
cost on the defined benefit obligation and an expected rate of
return on plan assets have been replaced with a net interest charge
calculated by applying the discount rate to the net defined benefit
liability.
New standards, amendments to standards or interpretations
No standards have been early adopted by the group. Other than
the adoption of IAS 19R there has been no material impact on the
group's consolidated financial statements from the application of
new standards which are mandatory for the first time for the
financial year ended 31 December 2013, or from amendments to
standards or interpretations of existing standards.
Brammer notes to the accounts
1. COMPARATIVE RESULTS
Comparative figures for the year ended 31 December 2012, as
adjusted to reflect the adoption of IAS 19R, are taken from the
company's statutory accounts which were delivered to the Registrar
of Companies with an unqualified audit report. Copies of the 2012
Annual Report and the 2013 interim report are available on the
company's website (www.brammer.biz).
2. SEGMENTAL ANALYSIS
The Board has been identified as the chief operating
decision-maker. The Board reviews the group's internal reporting as
the basis for assessing performance and allocating resources.
Management has determined the operating segments based on these
reports. The group is primarily controlled on a country by country
basis, in line with the legal structure. In 2013 the group has made
changes to the structure of its internal reporting and accordingly,
the operating segments have been modified from those previously
reported; details of the changes in composition are given in the
footnote below.
The group's internal reporting is primarily based on performance
reports run at 'management' exchange rates - exchange rates which
are set at the beginning of each year. For 2013 the primary
management rate used was EUR1.25 : GBP1, and the prior period
segmental results have been restated at this rate.
Accordingly the segment information below is shown at the
'management' exchange rates with the exchange effect being a
reconciling item between the segment results and the totals
reported in the financial statements at actual exchange rates. The
management rate applies to income statement, balance sheet and cash
flows.
The Board assesses the performance of the operating segments
based on their underlying operating profit, which comprises profit
before interest and taxation, excluding amortisation of acquired
intangibles and non-recurring or exceptional items such as
restructuring costs and impairments when the impairment is the
result of an isolated, non-recurring event.
Segment assets include property, plant and equipment, other
intangible assets, inventories, and trade and other receivables.
All inter-segmental trading is on an arms-length basis.
UK* Germany* France Spain Benelux Eastern Total
Europe
& Other*
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 31 December
2013
Continuing operations
Revenue
Total revenue 297.9 115.0 81.6 45.3 51.7 56.3 647.8
Inter company sales (4.6) (2.9) (2.1) (2.6) (1.4) (0.9) (14.5)
Sales to external
customers 293.3 112.1 79.5 42.7 50.3 55.4 633.3
Exchange effect 18.6
-------------
Total sales to external
customers 651.9
-------------
Underlying operating
profit 21.0 6.5 4.2 4.7 2.6 - 39.0
Exchange effect 0.8
-------------
Total underlying
operating profit 39.8
Amortisation of acquired
intangibles (1.2)
Acquisition related
costs (1.3)
Total operating profit 37.3
Finance expense (4.5)
Finance income 0.1
Profit before tax 32.9
Tax (8.8)
Profit for the year 24.1
-------------------------- ------ --------- ------- ------ -------- ---------- -------------
Segment assets 98.1 35.1 34.0 23.2 24.2 32.8 247.4
Exchange effect 4.7
-------------
252.1
Goodwill 91.2
Acquired intangibles 9.2
Cash 17.7
Deferred tax 10.9
Total assets 381.1
-------------------------- ------ --------- ------- ------ -------- ---------- -------------
2. SEGMENTAL ANALYSIS (continued)
UK* Germany* France Spain Benelux Eastern Total
Europe
& Other*
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Other segment items
Continuing operations
Capital expenditure
- intangible assets 0.4 0.5 0.4 0.3 0.2 4.8 6.6
- property , plant
and equipment 2.6 0.6 0.2 0.3 1.6 1.6 6.9
Exchange effect 0.2
--------
Total capital expenditure 13.7
--------
Amortisation/depreciation
- other intangible
assets - (0.1) (0.1) (0.1) (0.2) (1.8) (2.3)
- property, plant
and equipment (1.6) (0.3) (0.3) (0.3) (0.4) (0.6) (3.5)
Exchange effect (0.3)
--------
Total
amortisation/depreciation (6.1)
--------
UK* Germany* France Spain Benelux Eastern Total
Europe
& Other*
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 31 December
2012
Continuing operations
Revenue
Total revenue 289.8 117.4 84.9 41.9 52.2 57.9 644.1
Inter company sales (3.7) (2.6) (0.7) (0.8) (1.2) (0.4) (9.4)
Sales to external
customers 286.1 114.8 84.2 41.1 51.0 57.5 634.7
Exchange effect 4.9
--------
Total sales to external
customers 639.6
--------
Underlying operating
profit 18.1 7.0 4.2 4.1 2.7 0.9 37.0
Exchange effect 0.3
--------
Total underlying
operating profit 37.3
Amortisation of acquired
intangibles (1.3)
Exceptional items (6.4)
Total operating profit 29.6
Finance expense (3.5)
Finance income 0.1
Profit before tax 26.2
Tax (6.8)
Profit for the year 19.4
------------------------------ -------- ----------- --------- -------- ---------- ---------- --------
Segment assets 90.5 33.6 31.8 16.5 23.7 31.5 227.6
Exchange effect 2.9
--------
230.5
Goodwill 89.8
Acquired intangibles 10.4
Cash 2.2
Deferred tax 8.9
Total assets 341.8
------------------------------ -------- ----------- --------- -------- ---------- ---------- --------
Other segment items
Continuing operations
Capital expenditure
- intangible assets 0.6 0.1 0.1 0.1 0.2 3.2 4.3
- property , plant
and equipment 2.2 0.2 0.4 0.2 0.5 1.0 4.5
Exchange effect 0.3
--------
Total capital expenditure 9.1
--------
Amortisation/depreciation
- other intangible
assets (0.1) (0.1) - - (0.2) (1.5) (1.9)
- property, plant
and equipment (1.2) (0.2) (0.3) (0.3) (0.4) (0.6) (3.0)
Exchange effect (0.2)
--------
Total
amortisation/depreciation (5.1)
--------
(*) The changes to the composition of reportable segments, which
have been reflected in all periods presented above, are as
follows:
Ireland, previously included in 'Other', is now included in
'UK'; Austria, previously included in 'Other', is now included in
Germany; 'Other' has now been included with Eastern Europe.
The table below details the 'management rate' used and the
actual exchange rates used for the primary exchange rate of
Sterling to Euro for the year and the comparative year:
2013 2012
Management rate EUR1.25 EUR1.20
Actual average rate EUR1.182 EUR1.230
Year end rate EUR1.202 EUR1.233
3. EARNINGS PER SHARE
2013
-----------------------------
Earnings per
share
------------------
Earnings Basic Diluted
GBPm
Weighted average number of shares in issue
('000) 117,562 121,290
Total
Profit for the financial year 24.1 20.5p 19.9p
Intangibles amortisation and acquisition
related costs 2.5
Tax on intangible amortisation and acquisition
related costs (0.6)
Earnings before amortisation and acquisition
related costs 26.0 22.1p 21.4p
------------------------------------------------ --------- -------- --------
2012*
-----------------------------
Earnings per
share
------------------
Earnings Basic Diluted
GBPm
Weighted average number of shares in issue
('000) 117,117 120,980
Total
Profit for the financial year 19.4 16.6p 16.0p
Amortisation of acquired intangibles 1.3
Exceptional items 6.4
Tax on exceptional items (1.6)
Tax on amortisation of acquired intangibles (0.3)
Earnings before amortisation and exceptional
items 25.2 21.5p 20.8p
---------------------------------------------- --------- -------- --------
*Restated on adoption of IAS 19R 'Employee Benefits'.
4. EXCEPTIONAL ITEMS
2013
There were no exceptional items in 2013.
2012
A total pre-tax operating exceptional charge of GBP6.4 million
was recognised in 2012. This included the following charges arising
from the continuing programme of integrating the Buck & Hickman
business: a GBP0.8 million charge to write-down stock which had
been identified as no longer integral to Brammer's core tools &
general maintenance product portfolio and future trading strategy,
together with a GBP0.8 million charge to write-down software which
would no longer be developed or supported in the combined business
going forward.
A wider review of the group's operating cost base resulted in
headcount and other restructuring costs of GBP4.8 million being
incurred and recognised as an exceptional charge. These actions
were taken in response to the challenging market conditions in
which the group operated during the year, to optimise headcount in
order to continue to realise operational benefits in the UK
business and the wider group.
5. CASH FLOW FROM OPERATING ACTIVITIES
2013 2012
GBPm GBPm
Profit for the year attributable to
equity shareholders 24.1 19.4
Tax charge 8.8 6.8
Depreciation/amortisation of tangible
and intangible assets 7.3 7.9
Share options - value of employee
services 2.7 2.0
Gain on sale of property, plant and
equipment (0.1) (0.1)
Financing expense - net 4.4 3.4
Movement in working capital (excluding
the effect of exchange movements and
fair value adjustments) (1.7) (14.1)
Cash generated from operations after
acquisition related costs and exceptional
items 45.5 25.3
------ -------
6. CLOSING NET DEBT
2013 2012
GBPm GBPm
Borrowings - current (4.0) (3.2)
Borrowings - non-current (66.6) (52.8)
Cash and cash equivalents 17.7 2.2
Closing net debt (52.9) (53.8)
------- -------
7. CHANGES IN SHAREHOLDERS' EQUITY
The statement of changes in shareholders' equity is shown as a
primary statement.
The number of ordinary 20p shares in issue at 31 December 2013
was 118,004,074 (31 December 2012: 117,204,074).
Dividends
A dividend, amounting to GBP7.5 million, which related to 2012
was paid on 2 July 2013 (2012: GBP6.7 million). An interim dividend
amounting to GBP4.0 million (2012: GBP3.5 million) was paid on 1
November 2013. The directors propose a final dividend of 6.8p per
share (2012: 6.4p) payable on 3 July 2014. This final dividend
amounting to GBP8.0 million (2012: GBP7.5 million) has not been
recognised as a liability in these financial statements.
8. SUBSEQUENT EVENTS
On 7 January 2014 the group announced the acquisition of 100% of
Lönne Holding AS, a leading distributor of OEM and MRO industrial
products operating from 15 locations predominantly in Norway and
Sweden with further operations in Finland and Denmark. The initial
consideration comprised a cash consideration of Norwegian Krone
('NOK') 190.1 million (GBP19.0 million) together with net debt
assumed on completion of NOK 188.1 million (GBP18.8 million). In
addition, deferred consideration of up to NOK 80.0 million (GBP8.0
million) is payable based on a multiple of the increase in EBITDA
over set targets for each of the years 2014, 2015 and 2016. The
fair value of assets acquired has not yet been assessed, and will
be finalised in 2014.
9. PRELIMINARY ANNOUNCEMENT
A copy of the preliminary announcement is available for
inspection at the registered office of the company, St Ann's House,
1 Old Market Place, Knutsford, Cheshire, WA16 6PD and the offices
of Hudson Sandler Limited, 29 Cloth Fair, London, EC1A 7NN. It will
also be available on the company's website www.brammer.biz from 18
February 2014.
10. FINAL DIVIDEND
Relevant dates concerning the payment of the final dividend
are:
Annual general meeting 16 May 2014
Record date 6 June 2014
Payment date 3 July 2014
11. STATUTORY ACCOUNTS
This preliminary announcement is taken from the full audited
statutory accounts which will be filed with the Registrar of
Companies following the company's annual general meeting. The
statutory accounts have received an unqualified report by the
auditors and do not contain any statements under section 498 (2) or
(3) of the Companies Act 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TRMPTMBIBBRI
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