BRAM Brammer

RNS Number:5172W
Brammer PLC
15 March 2004



15 March 2004
                                  Brammer plc

                   Disposal of the Livingston Rental Business


Highlights:

-  The Disposal of Brammer's equipment rental and UK calibration
   businesses (the "Livingston Rental Business") to a newly formed company 
   ("De Facto") backed by an MBO team led by Mel Porter (a former Brammer 
   director)

-  Consideration will comprise:

-  an initial cash payment of #9,875,000 on completion (partially
   funded through a #3m loan from Brammer, repayable 13 months after completion)
   and subject to adjustment following completion to reflect the net assets in 
   the Livingston Rental Business at completion;

-  a deferred cash payment of #2.5 million payable 18 months after
   completion; and

-  further payments of up to approximately #2.8 million contingent on
   the sale and rental following completion of certain mothballed test and
   measurement assets

-  Completion of the Disposal will mark the final step in Brammer's
   withdrawal from the calibration and asset rental markets addressed by the
   Livingston Division

-  Following the Disposal and the completion of the sale of the 
   Livingston Calibration Business announced on 22 December 2003 Brammer will
   solely consist of Brammer Industrial Services, the leading European supplier 
   of technical components and related services to the maintenance, repair and
   operations markets

Commenting on the Disposal, Ian Fraser, Chief Executive of Brammer, said:

"I am pleased to announce the disposal of the Livingston Rental Business which,
together with the disposal of the Livingston Calibration Business announced on
22 December 2003, marks the complete withdrawal of Brammer from the businesses
carried out by the Livingston Division.  When aggregated the price that has been
achieved for these two transactions is close to the Livingston Division's net
tangible asset value.  We will now be able to fully focus on consolidating and
developing further Brammer Industrial Services' position as the leading European
supplier of technical components and related services to the maintenance, repair
and operations markets."


Enquiries:

Brammer plc                             0161 928 3363
David Dunn, Chairman
Ian Fraser, Chief Executive
Paul Thwaite, Finance Director

Citigate Dewe Rogerson                  020 7638 9571
Martin Jackson
Anthony Kennaway


Brammer plc

Disposal of the Livingston Rental Business

Introduction

Today the Board of Brammer announces that it has reached agreement to sell its
equipment rental and UK calibration businesses (together, the "Livingston Rental
Business") to De Facto, a buy-out vehicle owned, inter alia, by Mel Porter (a
former Brammer director), for initial cash consideration of #9,875,000
(partially funded through a #3 million loan from Brammer repayable 13 months
following completion) and a deferred cash payment of #2.5 million payable 18
months after completion.  In addition, Brammer will receive proceeds calculated
by reference to the proceeds of sale and rental by the Livingston Rental
Business of certain mothballed test and measurement assets post completion up to
a maximum of approximately #2.8 million. Brammer will, following completion,
retain a 24.9 per cent. stake in De Facto, which De Facto will have the right to
redeem at a price of between #500,000 and #2 million, depending on the date of
actual repayment of the #2.5 million deferred cash payment.

Background and reasons for the Disposal

The Group's stated strategy is to divest itself of the Livingston Division and
to focus its resources on further developing Brammer Industrial Services as the
leading European supplier of technical components and related services to the
maintenance, repair and operations market.

Over the last two years the Board has undertaken a significant and extensive
rationalisation of the Livingston Division in order to return it to
profitability and reduce the Group's exposure to the technology and telecom
markets whilst exploring opportunities to divest of all or part of the
Livingston Division.  The decline in the technology and telecom markets since
mid-2001 has impacted particularly badly on the Livingston Rental Business which
is highly operationally geared and exposed to technology and telecom spending
cycles.  The speed and severity of the decline in investment in these areas
directly led to an inventory impairment provision of #22.7 million being
incurred by the Livingston Rental Business in the year ended 31 December 2001.
Continued depressed markets since this time have resulted in total exceptional
charges of #6.9 million being incurred by the Group in restructuring costs
intended to stabilise the Livingston Rental Business and restore it to
profitability.

The first stage in the divestment of the Livingston Division was the disposal of
the Livingston Calibration Business announced on 22 December 2003, which was
approved by Shareholders at the Extraordinary General Meeting held on 12 January
2004 and which is expected to complete by 30 April 2004.  The proposed disposal
of the Livingston Rental Business to De Factowill complete the divestment of
the Livingston Division and leave the Group able to focus on the opportunities
for BIS.

Information on the Livingston Rental Business

The Livingston Rental Business consists of the whole of Brammer's equipment
rental business and the UK calibration services business. The equipment rental
business rents IT hardware and test measurement equipment to customers and is
based at locations in the UK and throughout continental Europe. The UK
calibration services business provides calibration services for the test and
measurement equipment of UK customers.  For the year ended 31 December 2002 the
Livingston Rental Business reported sales of #60.4 million and an operating loss
of #3.0 million, and as at 31 December 2002 had net assets of #43.0 million.

Principal terms and conditions of the Disposal

Under the Sale and Purchase Agreement, Brammer will sell (or procure the sale
of) the Livingston Rental Business to De Facto for a gross cash consideration of
#9,875,000 payable at completion of the Disposal (including through the
repayment of certain intra-group indebtedness), subject to an adjustment to
reflect the net asset value of the Livingston Rental Business at completion of
the Disposal. The consideration is to be partially funded through a #3 million
loan to De Facto from the Company, repayable 13 months after completion of the
Disposal.  De Facto is also obliged to put the Livingston Rental Business in
funds to repay a further #2.5 million of intra-group indebtedness to Brammer 18
months after completion of the Disposal.

In addition, De Facto will make further payments to Brammer (up to a maximum
amount of approximately #2.8 million) calculated by reference to the proceeds of
thesale and rental of certain mothballed test and measurement assets by the
Livingston Rental Business after completion of the Disposal.

Completion of the Disposal is conditional upon, inter alia, De Facto completing
its funding arrangements.  Completion of the Disposal is anticipated to occur by
31 March 2004.

Brammer intends to announce its results for the year ended 31 December 2003 on 7
April 2003.

Exceptional items in the 2003 and 2004 accounts

As outlined in the announcement on 22 December 2003 in relation to the proposed
disposal of Livingston Calibration, the Group anticipates recording exceptional
charges in the 2003 accounts largely in relation to the Livingston division.
These are likely to amount in aggregate to approximately #33 million. These
exceptional charges comprise an impairment provision in respect of the rental
assets (#24m), restructuring charges (#7m) and transaction costs for the
disposals (#2m).  There will also be a deferred tax asset write down included in
the tax charge for the year.

The cash costs of these exceptional charges amount to approximately #8 million,
the substantial proportion of which was paid in the year to 31 December 2003.
The Board anticipates reporting that net debt at 31 December 2003 was
approximately #80 million, in line with expectations.


The Board also anticipates recording an exceptional profit on completion of the
sale of the Livingston Calibration business (expected to be 31 March 2004) which
will be recognised in the accounts for the period to 31 December 2004.


Financial effects of the Disposal

The net proceeds of the Disposal will be used to pay down Brammer's net debt
position.  Whilst the Group will no longer consolidate any future profits
generated by the Livingston Rental Business after the completion of the
Disposal, its interest costs will be reduced as a result of the receipt of the
net proceeds of the Disposal.


APPENDIX


The following principal definitions apply throughout this announcement unless
the context requires otherwise:


"BIS"                                 Brammer Industrial Services Division;

"Company" or "Brammer"                Brammer plc;

"De Facto"                            De Facto 1059 Limited;

"Board"                               the directors of the Company or a duly authorised committee thereof;

"Disposal"                            the disposal of the Livingston Rental Business in accordance with the
                         Sale and Purchase Agreement;

"Group"                               Brammer and its subsidiary and associated undertakings;

"Livingston Calibration Business"     Brammer's European (excluding the UK) calibration services businesses
  and the European test and measurement services business;

"Livingston Division"                 Brammer's Livingston division;

"Livingston Rental Business"          the whole of Brammer's equipment rental business and Brammer's UK
                                      calibration services businesses;

"Sale and Purchase Agreement"         the conditional agreement dated 12 March 2004 between the Company and
                                      De Facto relating to the Disposal;

"Shareholders"                        holders of Shares;

"Shares"                              ordinary shares of 20p each in the capital of the Company;

"United Kingdom" or "UK"              the United Kingdom of Great Britain and Northern Ireland.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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