TIDMBRAM
RNS Number : 1503Y
Brammer PLC
19 February 2013
FROM HUDSON SANDLER FOR
BRAMMER
PRESS RELEASE
19 February 2013
Brammer plc
("Brammer" or the "Group")
PRELIMINARY RESULTS
Proven STRATEGY ADDs VALUE TO CUSTOMERS, DELIVERS GROWTH AND
INCREASES RESILIENCE
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
2012.
Financial Highlights
-- Record group revenue up 11.9% to GBP639.6 million (2011:
GBP571.5 million). At constant currency total revenue growth is
16.2%.
-- Gross margin up 20 basis points to 30.5%. Gross margin is up
100 basis points to 31.6% excluding the dilutive effect of Buck
& Hickman during integration.
-- Operating profit (pre amortisation and exceptional items)
increased by 17.0% to GBP37.2 million (2011: GBP31.8 million). At
constant currency operating profit increased by 22.3%.
-- Operating margins (pre amortisation and exceptional items)
improved from 5.6% to a new high of 5.8%. Operating margin was 6.6%
excluding Buck & Hickman.
-- Profit before tax (pre amortisation and exceptional items)
increased by 19.0% to GBP34.5 million (2011: GBP29.0 million). At
constant currency profit before tax increased by 23.2%.
-- EPS (pre amortisation and exceptional items) increased by 10.6% to 21.9p (2011: 19.8p).
-- Dividend up 11.9% to 9.4p (2011: 8.4p) 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 9.8%* with Key
Account sales, following the acquisition of Buck & Hickman in
the fourth quarter of 2011, now representing 37.0% of revenues
(2011: 40.2%).
- Insite(TM) sales growth of 9.0%* with a net 57 new locations established.
- Strong revenue growth (20.1%(+) ) in Tools and General
Maintenance, boosted by successful launch of a pan-European
catalogue.
- Revenues from Utilities grew by 10.8% and Food and Drink by
7.7% on a like-for-like basis(+) increasing the group's resilience
to continuing economic uncertainty in our markets.
- Overall Brammer delivered GBP51.5* million of customer
validated cost savings to our customers.
* at constant currency
(+) at constant currency, excluding Buck & Hickman
Current Trading and Outlook
Ian Fraser, Chief Executive said:
"Driven by the provision of exceptional value and service to our
customers, coupled with continued investment in our long term
growth strategy, 2012 was a successful and significant year for
Brammer. The group has produced substantially increased sales and
profits and the acquisition of Buck & Hickman has exceeded our
original expectations. We believe this performance again
demonstrates the consistent and successful application of our
proven long term strategy and the strength of our management
team.
2013 will be another economically challenging year, but our
growth drivers will ensure we continue to perform well ahead of the
market. Our confidence in the outlook for the business is reflected
by the dividend increase."
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
Andrew Leach
Katie Matthews
BRAMMER PLC
2012 PRELIMINARY RESULTS
Overview and Strategy Implementation
Market Overview
Brammer addresses the enormous market for the provision of
Bearings, Mechanical Power Transmission, Fluid Power, Tools and
General Maintenance, and associated services to the maintenance
repair and overhaul "(MRO)" market in Europe.
We estimate the bearings market to be worth around EUR2 billion
annually and we have about a 10% share of that market making us the
clear European market leader. Our bearings presence gives us access
to a significant proportion of the key industrial procurement
personnel within businesses of all sizes across Europe. We see
bearings as the entry ticket into our customers allowing us to sell
the rest of our product range. The engineer who installs bearings,
to repair and maintain the machinery on the shop floor, is normally
also responsible for installing Power Transmission and Fluid Power
products and in doing his job uses our range of tools and general
maintenance products. Those responsible for purchasing bearings at
our customers are generally also responsible for purchasing the
rest of our product range.
In Mechanical Power Transmission we have approximately 3% of an
estimated EUR5 billion market. In Fluid Power we have just over 1%
of an estmated EUR10 billion European market and in our relatively
new product range of Tools and General Maintenance we have just 1%
of what we estimate to be a market worth at least EUR25 billion
across Europe. Overall we estimate the market for our entire range
of products to be worth in excess of EUR40 billion, of which we
currently have a market share of just under 2%. Ours is a highly
fragmented marketplace and, in spite of our tiny market share, we
are the European market leader. As a result our market share will
not be a constraint to growth for decades to come.
Our geographic footprint across 16 countries gives us a European
coverage far greater than any of our competitors and is highly
valuable to our customers who are increasingly seeking a trusted
level of quality and service across multiple countries and
locations.
Our customers realise that purchasing MRO supplies can be
complex and expensive, so they have chosen to partner with us to
make it easier and help reduce their costs. Our value proposition
is now a quotidian activity within Brammer and specifically
addresses a significant number of methodologies which can help the
customer reduce their total cost of acquisition of MRO supplies. In
addition, many businesses have undergone permanent change in the
way they operate and most are facing increased cost pressures and
more competition. Our value proposition specifically addresses
opportunities for the customer to improve productivity, assisted by
our field sales engineers and technical specialists, often in
association with our suppliers. Finally, all of our customers
recognise the need to have healthy cash flow and a strong balance
sheet, and our value proposition here has provided many cost
savings to our customers by helping them better manage their shop
floor inventory, thereby reducing working capital. In 2012 we
provided a record 5,500 recognised cost-saving actions to our
customers yielding them a financial benefit of GBP51.5 million.
Strategy
Our consistent, pellucid and proven strategy encompasses Growth,
Capabilities, Costs and Synergies.
Growth
Our growth drivers have served us well over the past nine years;
in 2012 we continued to invest in and benefit from our growth
strategy focused on Key Accounts, Product Range Extension,
Insites(TM) and segment-based marketing, giving rise, once more, to
growth significantly ahead of the market.
Overall organic sales per working day ("SPWD") revenue growth
(including incremental growth in Buck & Hickman since
acquisition) was 2.9%, with growth of 9.4% in the first quarter of
the year, declining to -0.7% in the final quarter as our markets
became more difficult. It is evident that our strategies of
attacking market segments with focused marketing material and
specialist sales people, growth through Key Accounts, the
development of Insites(TM), and growth through cross-selling and
Product Range Extension are contributing to significant market
share gains in most territories. Unless stated otherwise, all
numbers below exclude the impact of Buck & Hickman, and are
shown at constant currency.
We continued to focus on a market segmentation approach,
increasing our knowledge of customers' processes and selling to
their specific needs. In particular:
-- Food and Drink grew by 7.7%, to GBP71.0 million.
-- Pulp and Paper grew by 13.2% overall to GBP25.6 million.
-- Utilities grew by 10.8% to GBP20.8 million.
-- Automotive grew by 1.4% to GBP54.9 million.
-- Metals grew by 3.6% to GBP68.4 million.
Key Account SPWD grew by 9.8%, well below our target of 25%, as
customers tightened their belts to counter the economic uncertainty
which increased throughout the year. Key Accounts now represent
37.0% of total sales. Thirteen new European contracts were won,
each with a minimum contract period of three years and, in
aggregate, ultimate potential annual revenues in excess of GBP75
million. We continued to focus our business on more defensive
segments and increased our Key Account sales to the Food and Drink
segment by 11.7%, and FMCG by 7.6%. We also saw good market share
gains in the more cyclical sector of Metals (up 15.0%).
We opened a record 88 new Insites(TM), 38 full time and 50 part
time, with overall turnover growth of 9.0% to GBP105.2 million. 31
existing Insites(TM) were closed due to customer factory closures
or reduced demand, giving rise to a net addition of 57 Insites(TM)
in the year and a total of 327 Insites(TM) at the year end.
Extending the product offering to reflect the full Brammer range
in every territory continued, and whilst bearing sales declined by
7.6%, non bearing sales (excluding Buck & Hickman) rose by
5.2%, suggesting significant market share gains driven by growth of
20.1% in Tools and General Maintenance to GBP43.5 million and 6.4%
growth in Fluid Power to GBP96.2 million. During the year we spent
a great deal of management time, effort and investment in the
development of our Tools and General Maintenance business. We
created a new European Product Division for Tools, General
Maintenance, and Personal Protective Equipment, headed by our
former Brammer France Managing Director. This division, now nearly
20 strong, consists of senior managers and directors recruited from
Buck & Hickman as well as the wider Tools and General
Maintenance market.
We have used the relationship, experience and knowledge gained
through the acquisition of Buck & Hickman to develop our
relationship on a European basis with the key suppliers of these
products, and to leverage our relationships with customers in every
country. We identified and invited 50 key European or Global
suppliers to support us across Europe, and 48 accepted with great
enthusiasm. In just five months we produced a 1,008 page Tools and
General Maintenance catalogue, with 17,369 part numbers, 665
product groups, covering 50 brands. 60,000 copies of this catalogue
were produced in 10 different languages, and these catalogues
(weighing 120 tonnes in total and produced on sustainably sourced
paper) were delivered to our operating companies during September.
We have recruited Tools and General Maintenance experts in each
country, carried out extensive training, and developed
relationships and a supply chain with each of the 50 brands
locally. We have also placed a strategic stock of catalogue product
close to our National Distribution Centre near Nozay, south of
Paris, and are carrying out direct marketing campaigns to existing
Brammer customers, often in conjunction with our suppliers. As a
result, even though we delivered only about 15% of the catalogues
to customers in the final quarter of the year, we saw a 14%
increase in the sale of catalogue items compared to the rate of
sales in the first nine months.
Capabilities
The focus of our people and organisational capability continues
to be on supporting our growth. To that end, our pan-European
Marketing team is continuing the roll-out of our new Market
Segmentation material across Europe, with updated material
targeting 16 industry sectors translated into 9 languages,
distributed across our 16 country businesses. We have also
developed and launched a new sales training programme covering best
practice, our industry sector approach, and Brammer's value
proposition. The sales training is now in the process of being
delivered to all our sales teams.
We are continuing to develop the Brammer Insite(TM) Operations
Manual, localised into English, French, German and Spanish. During
2012 we introduced an Insite(TM) training programme designed to
raise awareness of the methods and processes required to identify,
target and set up a new Insite(TM). An Insite(TM) Manager Training
programme has also been developed during 2012 which sets out the
mandatory, expected, and advanced service levels that our
Insite(TM) managers will deliver to our customers. We have also
improved the branding of our Insites(TM), through the
implementation of consistent Insite(TM) workwear and improved
signage. These help to distinguish our Insites(TM) on the
customers' premises to help raise awareness of our presence, and to
develop the brand. A European Insite(TM) manager has been appointed
to manage the growth of Insite(TM) services across all 16
countries.
In order to increase the focus on our extended product range and
strengthen our cross-selling initiatives, we have recruited a
number of European Product Managers who are responsible for
developing and growing our business particularly in Tools and
General Maintenance products and also in Fluid Power and Power
Transmission.
We developed a new website with e-commerce functionality, aiming
to increase customer conversions via an enhanced user journey and
easy to find call-to-action opportunities. The new site features
more interactive content including "Quick Tips video clips"; we
have added new clips and other content regularly throughout 2012.
We have e-commerce solutions live in Poland, Spain, France,
Germany, Netherlands and Belgium, and will be launching our central
e-commerce solution in the remaining countries during 2013.
In February 2012 we repeated our independently run Europe-wide
customer satisfaction survey, involving 45-minute telephone
interviews with over 300 customers across Europe, and an online
questionnaire sent to a random sample consisting of 10% of our
100,000 customers. This confirmed further progress. This research
further strengthened our unprecedented insight into our customers'
requirements, helping us to appreciate their current and future
needs in detail, and to assist us with our strategic and
operational planning and service delivery. Our 2012 customer
satisfaction survey was also targeted at lapsed customers and
potential customers in an effort to understand better some of the
detractors and address the issues arising. There was also a
customer satisfaction study conducted in 2012 with Buck &
Hickman customers in order to gauge their levels of satisfaction
and compare and contrast this to Brammer customers and turn this
valuable insight into strategic action to help us to continue to
deliver excellent customer service.
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 and for critical, customer-facing
roles we are achieving 100% take-up of the two major foundation
programmes. We will continue to work with our suppliers to ensure
our employees receive the best possible product training.
Following analysis of the 2012 internal employee survey, we have
developed regional and functional action plans to maintain and
enhance the excellent links between our strategy and our
personnel.
The Brammer European Council of employee representatives meets
annually in June. This forum facilitates communication between the
Works Councils and Employee Forums from each country in the group,
ensuring the concerns and issues raised by our people can be heard
and addressed.
In addition, during 2012 the group commenced a graduate training
programme designed to support the future development of the group.
We recruited 10 graduates from 6 countries with each undertaking a
structured 2 year training programme including a minimum 6 month
overseas placement. This highlights the group's desire to develop
and train its people, to encourage mobility and to ensure the
consistent delivery of excellent service to all of our
customers.
Costs
We continued to work on increasing our spend with a smaller
number of suppliers and improving the level of marketing support,
pricing, and cooperation in the field received from those
suppliers. Gross margin, excluding Buck & Hickman, improved by
100 basis points year on year to 31.6%.
We continued to focus on efficient use of our Sales Distribution
and Administrative expense "(SDA)". SDA at constant currency grew
by 15.8% against a comparative sales growth of 16.2%. In
recognition of a significant slowdown in our markets we took prompt
and significant action in September to reduce our cost base. We
removed GBP5 million (3%) from our annualised SDA costs, which
incurred an exceptional cost of GBP4.8 million. This action has now
properly matched our cost base to our revenues and will benefit
2013 significantly.
Synergies
In order to develop our European Tools and General Maintenance
catalogue we have made further investment in our Master Data
Management system. Additional product data to cover the tools and
maintenance range has been incorporated into this system, giving
rise to a total of 4.7 million unique part numbers. To aid the
production of the catalogue we have developed a rich content
database and have associated in excess of twelve million product
attributes with 500,000 part numbers. Despite this extensive
database we continue to create in excess of 1,000 new and unique
part numbers on a European basis each working day.
Operating Performance and Key Performance Indicators
2012 2011
GBPm GBPm
Revenue 639.6 571.5
Gross margin % 30.5% 30.3%
Gross profit 194.8 173.3
Sales, Distribution and Administration costs* (157.6) (141.5)
Operating profit* 37.2 31.8
Operating return on sales* 5.8% 5.6%
Net interest (2.7) (2.8)
Profit before tax* 34.5 29.0
Cash generated from operations 25.2 28.2
Earnings per share* 21.9p 19.8p
Dividend per share 9.4p 8.4p
----------------------------------------------- -------- --------
*before amortisation of intangible assets and exceptional
items
Key Performance Indicators and other measures
2012 2011
Group sales growth* 16.2% 22.0%
Organic SPWD growth (including incremental growth
in Buck & Hickman since acquisition)* 2.9% 16.4%
Key Account SPWD growth* 9.8% 23.9%
Return on Capital employed 34.3% 32.3%
Net debt to EBITDA 1.3:1 1.0:1
Interest Cover 13.8 11.3
Stock turn 4.4 4.7
--------------------------------------------------- ------ ------
*at constant currency
Revenue
Revenue increased by 11.9%, of which the UK contributed 16.3%
growth compensating in part for a 4.4% reduction in continental
Europe, reflecting an adverse currency exchange movement. Revenue
in the UK grew by 48.8% reflecting a full year of the Buck &
Hickman business which was acquired on 30 September 2011. At
constant exchange rates, revenue increased by 16.2%.
Gross profit
The gross profit for the year was GBP194.8 million (2011:
GBP173.3 million). Gross margin increased to 30.5% (2011: 30.3%).
Gross margin, excluding Buck & Hickman, increased by 100 basis
points to 31.6%.
Sales, Distribution and Administrative Expense
Total reported SDA costs increased by GBP19.3 million from
GBP146.0 million in 2011 to GBP165.3 million; excluding
amortisation of acquired intangibles and exceptional items the
increase was 11.4% from GBP141.5 million in 2011 to GBP157.6
million, which includes the full year impact of Buck & Hickman.
Organic SDA at constant currency increased by 3.6%, and reflected
the recruitment of additional Key Account and management personnel
in support of the growth drivers, together with the creation of the
European Product Division for Tools and General Maintenance
products.
Operating profit
Operating profit (before amortisation and exceptional items)
increased by GBP5.4 million to GBP37.2 million in 2012 from GBP31.8
million in 2011. Return on sales increased to 5.8% (2011:
5.6%).
Interest
The net interest charge for the year was GBP2.7 million (2011:
GBP2.8 million). The effective interest rate on average net
borrowings was 4.3% (2011: 4.5%). EBIT before exceptional items
covers interest by 13.8 times (2011: 11.3 times).
Profit before tax
Profit before tax from continuing operations for the year was
GBP26.8 million (2011: GBP24.5 million). Profit before tax,
amortisation and exceptional items but after finance expense was
GBP34.5 million (2011: GBP29.0 million).
Tax
The overall tax charge for the year of GBP7.0 million (2011:
GBP6.2 million) consisted of the current year charge of GBP6.9
million and the prior year charge of GBP0.1 million. Current year
tax represents an effective tax rate of 26.0% which is higher than
the expected rate of 24.5% primarily as a result of charges arising
from the differences in tax rates across Europe of GBP0.3 million
and adjustments arising from tax losses in the year on which no
benefit was recognised of GBP0.8 million, offset by a credit
arising from a release of tax contingent liabilities of GBP0.7
million and miscellaneous credits of GBP0.1million.
Earnings per share
Basic earnings per share increased by 0.1p from 16.8p to 16.9p
in 2012. Earnings per share, before amortisation and exceptional
items, increased by 10.6% from 19.8p in 2011 to 21.9p in 2012.
Dividend
The interim dividend for 2012 was increased by 11.1% to 3.0
pence per share. Given the growth in earnings the Board is now
proposing a 12.3% increase in the final dividend to 6.4 pence per
share. Total dividends for 2012 would then amount to 9.4 pence per
share which is a 11.9% increase over the prior year. At this level
the total dividend would be covered 2.33 times by earnings. Subject
to shareholder approval, the final dividend will be paid on 2 July
2013 to shareholders on the register at close of business on 7 June
2013.
Return on operating capital employed
The return on operating capital employed, based on operating
profit before amortisation and exceptional items, was 34.3% (2011:
32.3%) for the total group.
Goodwill
Goodwill in the balance sheet stands at GBP89.8 million at the
end of the year (2011: GBP90.0 million), a net reduction of GBP0.2
million. In 2012, goodwill increased by GBP1.2 million arising from
two small bolt-on acquisitions made during the year and decreased
by 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.
Trading during the year
Profit from operations before exceptional items, amortisation,
interest and tax ("underlying operating profit") increased by 17.0%
to GBP37.2 million (2011: GBP31.8 million), of which GBP18.5
million was delivered in the first half and GBP18.7 million in the
second half (see table below).
First half Second half Full year
2012 GBPm GBPm GBPm
Revenue 331.1 308.5 639.6
Underlying operating profit* 18.5 18.7 37.2
2011 GBPm GBPm GBPm
Revenue 275.2 296.3 571.5
Underlying operating profit* 15.4 16.4 31.8
* profit from operations before exceptional items, amortisation,
interest and tax.
For the first half, revenue increased by GBP55.9 million
reflecting the full effect of the Buck & Hickman acquisition
made in the second half of 2011. Underlying operating profit
increased by GBP3.1 million. For the second half, revenue increased
by GBP12.2 million reflecting increasingly challenging market
conditions, together with a smaller acquisition effect from Buck
& Hickman. Additional underlying operating profit of GBP2.3
million in the second half reflected continued focus on gross
margin improvements and savings from cost control measures.
Exchange rates had an adverse impact on the year's results
reducing growth in revenue by 5.2% in revenue and underlying
operating profit by 6.2%.
Exceptional items
A total pre-tax operating exceptional charge of GBP6.4 million
has been recognised. As part of the continuing programme of
integrating the Buck & Hickman business, which was acquired on
30 September 2011, further lines of stock identified as no longer
integral to Brammer's core tools and general maintenance product
portfolio and future trading strategy were written down to their
estimated net realisable value. The resulting GBP0.8 million charge
has been recognised as an exceptional item. Software which will no
longer be developed or supported in the combined business going
forward has been written down to reflect its revised estimated
useful life resulting in a further GBP0.8 million charge.
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 to optimise headcount in order to continue to realise
operational benefits from the Buck & Hickman acquisition and
also in response to the increasingly challenging market conditions
in which the group operated during the year.
Following the acquisition of the Buck & Hickman business the
following exceptional charges were recognised in 2011. Acquisition
costs incurred of GBP0.5 million, together with GBP0.8 million of
branch co-location costs and a GBP0.4 million charge for write-down
of stock, being related costs incurred up to 31 December 2011 in
the first phases of integrating the business with that of Brammer
UK, were recognised as exceptional costs. In addition a further
charge of GBP1.5 million, the majority of which related to
restructuring actions taken in the wider group as first steps in
realising operational benefits from the acquisition, was included
in the total pre-tax operating exceptional charge of GBP3.2
million.
Cash flow
2012 2011
GBPm GBPm
------------------------------------------------------ ------- -------
Cash inflow from operating activities 25.2 28.2
Cash inflow from operating activities before
exceptional items 28.6 28.9
Cash outflow from exceptional items (3.4) (0.7)
------------------------------------------------------ ------- -------
Cash inflow from operating activities 25.2 28.2
------------------------------------------------------ ------- -------
Net capital expenditure (purchases net of disposals) (8.9) (5.8)
------- -------
Operational cash generation 16.3 22.4
Acquisitions (including net debt acquired) (1.1) (26.9)
Deferred consideration and earn out (10.4) (1.8)
Tax (7.9) (4.1)
Interest, dividends, pension obligations & other (15.0) (13.6)
Net proceeds from placing - 24.8
Purchase of own shares (1.1) (0.1)
Net proceeds from issue of shares 0.1 0.1
------- -------
(Increase)/decrease in net debt (19.1) 0.8
Opening net debt (35.3) (36.7)
Exchange 0.6 0.6
Closing net debt* (53.8) (35.3)
======= =======
* total borrowings net of cash and cash equivalents.
Net debt increased by GBP18.5 million from GBP35.3 million to
GBP53.8 million. At the year end, net debt/EBITDA stood at 1.3:1
times (2011: 1.0:1 times).
Net cash inflow from operating activities of GBP25.2 million
decreased by GBP3.0 million from GBP28.2 million in 2011, which is
after GBP10.8 million outflow relating to inventories, and GBP3.4
million outflow (2011: GBP0.7 million) associated with exceptional
items in the current year and provision utilisation in 2012 of
exceptional items from prior years. Stock has increased
significantly to support the development of the Tools and General
Maintenance product range and following the launch of the Tools and
General Maintenance catalogue in the last quarter of the year. The
operating cash inflow funded the payment of GBP10.4 million of
deferred consideration, GBP7.9 million taxation payments, and
GBP15.0 million for dividends, interest and pension obligations.
Net capital expenditure increased significantly from GBP5.8 million
to GBP8.9 million reflecting continued increased investment in
software development. Consequently, average net borrowings in 2012
were GBP62.8 million compared to GBP54.5 million in 2011.
Pensions
The net pension liability relating to the defined benefit
pension schemes increased by GBP4.9 million to GBP21.7 million
(2011: GBP16.8 million). The principal factors contributing to this
increase were a GBP7.1 million net actuarial loss on scheme
liabilities offset by GBP3.2 million of employer contributions.
The main financial assumptions used were a discount rate of 4.4%
(2011: 4.8%), a 2.8% (2011: 3.0%) rate of increase for pensions in
payment and a 2.2% (2011: 2.4%) rate of increase for pensions in
deferment. The main demographic assumptions used are broadly
unchanged. The charge recognised in the income statement increased
to GBP0.9 million (2011: GBP0.1 million) reflecting a lower
expected return on scheme assets. Preliminary indications are that
the impact of adopting IAS19R will be an additional charge to
profit in 2013 of up to GBP1.0 million.
Financing and Covenants
The group is 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, GBP30
million of undrawn overdraft facilities are available. The amount
drawn under the revolving credit facility as at 31 December 2012
was GBP51.3 million (EUR63.3 million).
Operating Segments
Summary trading performance by segment at 2012 constant currency
rates (EUR1.20 : GBP1)
External Revenue RevenueGrowth SPWD** Growth Operating Operating
(like- for- Profit* Profit growth*
like)
2012 2011 2012 2012 2012 2011 2012
GBPm GBPm % % GBPm GBPm %
UK(+) 283.4 190.5 48.8% 7.6% 18.1 9.4 92.6%
Germany 115.6 115.5 0.1% 0.6% 7.9 7.8 1.3%
France 87.7 84.5 3.8% 3.5% 4.4 4.0 10.0%
Spain 42.8 42.9 -0.2% -0.3% 4.3 3.3 30.3%
Benelux 53.1 49.2 7.9% 7.5% 2.8 2.6 7.7%
Eastern
Europe 48.4 56.8 -14.8% -9.4% 0.9 3.6 -75.0%
Other 16.3 17.7 -7.9% -7.2% -0.6 0.2 n/a
Total 647.3 557.1 16.2% 2.9% 37.8 30.9 22.3%
--------- -------- -------------- -------------- -------- ------ -----------------
Exchange
effect*** (7.7) 14.4 -4.3% -4.5% (0.6) 0.9 -5.3%
--------- -------- -------------- -------------- -------- ------ -----------------
As reported 639.6 571.5 11.9% -1.6% 37.2 31.8 17.0%
========= ======== ============== ============== ======== ====== =================
* operating profit before amortisation and exceptional items
** sales per working day
*** to reconcile results and analysis to actual exchange rates
for 2012 and 2011
(+) including Buck & Hickman
UK (including Iceland and Norway)
Our largest operation, and the one where the Brammer development
strategy is most advanced, achieved organic SPWD growth of 7.6%
and, including Buck & Hickman, increased operating profit by
92.6% to GBP18.1 million.
Key Account sales grew by 7.2% in the year, and now represent
67.1% of turnover. Several new contracts were won with customers
such as Welsh Water, Anglian Water, SRCL, London Underground,
Innospec and many others. Key Accounts won last year, including EDF
Energy, Tata Steel, BAE Systems performed well and contributed to
growth. Our value proposition continues to be attractive to
customers and we have further honed our skills in delivering cost
savings and adding value for our customers. In 2012 we recorded
3,054 individual cost savings for over 200 customers, with a
combined saving of more than GBP34.2 million.
We opened 17 new full-time Insites(TM) and increased sales
through these Insites(TM) and part-time Insites(TM) (those
locations where we have several regular clinics with the customer's
staff each week) by 2.2%. Six existing full-time Insites(TM) closed
giving a net increase of 11. Our new Brammer Iceland branch in
Reykjavik performed well, and our Alcoa business in Norway has
grown substantially.
Finally, our cross-selling initiatives continued to be
successful with 19.6% sales growth in our Tools and General
Maintenance range.
Buck & Hickman
Buck & Hickman performed well throughout the year and
exceeded our expectations. Several new Key Account contracts were
won and the existing key account contracts all performed well
giving rise to SPWD growth of 9.3% (including a full year
comparative). We have successfully co-located the two businesses
obtaining synergies in 10 of the 28 branches of Buck & Hickman
by incorporating the Brammer branches into those locations.
Additional synergies arising from purchase leverage effects, price
management initiatives and reduced logistics costs have contributed
to an overall synergy benefit in excess of GBP3 million, well ahead
of our original expectations. We expect these synergy benefits to
continue, and are confident we will achieve our three year target
of GBP7.5 million ahead of our original plan. There remains a
significant benefit to be had through cross-selling opportunities
between the Brammer UK and Buck & Hickman customers.
Germany
SPWD grew by 0.6%, with the growth rate declining throughout the
year due to tougher comparators and significant slowing in the
Original Equipment Manufacturing ("OEM") segment of the market.
SPWD growth in the first quarter was 6.4%, but the fourth quarter
declined to 0.8%. Operating profit improved by 1.3%. Our investment
in Key Accounts paid off with an increase in sales in this segment
of 8.4%, now representing 29.7% of total sales. We delivered a
total of 933 signed off cost saving projects to our customers,
representing EUR3.3 million of savings. We won new contracts with
Johnson Controls IS, Prettl Group, Novatis Hexal, PepsiCo, Albea,
Lisi and Becton & Dickinson.
Our continued investment in Fluid Power generated healthy SPWD
growth of 14.6%, whilst our new investment in Tools and General
Maintenance Products resulted in SPWD growth of 13.2%. We
established ten new Insites(TM) with total Insite(TM) sales growing
16.7%. Our focus on the market segments of Food and Drink,
Utilities, and Construction and Aggregates resulted in several new
contract wins and increased market share; 155 customer events were
held across Germany addressing more than 1,600 MRO specialists from
those segments, raising the awareness of Brammer as a solutions
provider.
France
SPWD increased by 3.5%, whilst operating profit increased by
10%. Key Account sales increased 12.3% and, including the
Automotive segment, now represent 39.7% of turnover. We delivered a
total of 579 signed-off cost saving projects to our customers,
representing EUR3.3 million of savings. New contracts were won with
Groupe Seb, Lisi, Alcoa, UPM, and many others. We opened 15 new
Insites(TM), though 7 closed, bringing the total to 39, with
revenue growth of 27.3%. Tools and General Maintenance and Personal
Protection Equipment produced sales growth of 16.5%, while Fluid
Power grew by 14.6% and now represents 17.0% of total sales.
Spain
SPWD were broadly flat due to tougher comparators and further
slowdown in the OEM segment of our market. Operating profit
increased by 30% due to gross profit improvement, tight management
of costs and further consolidation of our supplier base. Our Key
Account revenues increased by 15.3% (representing 36.4% of sales),
and we won new contracts with AGC, Amcor, PepsiCo, Gates and many
others. We provided over EUR2.6 million of cost savings to our Key
Account customers. Ten new Insites(TM) were established, bringing
the total, after closures, to 30, with Insite(TM) sales increasing
by 31.8%. Our marketing focus was on Food and Drink (up 19.3%). 129
customer symposiums attracted 421 organisations. Extraordinary
progress was made in Product Range Extension, with sales of the
Tools and General Maintenance range up 89%, and Fluid Power up
24%.
Benelux
SPWD in the Benelux countries grew by 7.5%, whilst operating
profit increased by 7.7%. Key Account SPWD growth in Holland was
33.6% and in Belgium 11.1%. We won new contracts with Bosch,
PepsiCo, SCA, Kuhn and Refresco and many others. In Holland
Mechanical Power Transmission produced SPWD growth of 5.4% whilst
Fluid Power grew by 34.0%. We opened three new Insites(TM) in
Belgium, increasing sales through Insites(TM) by 13.8%, and 10 new
Insites(TM) in Holland with sales growth of 103.7%. Our focus on
Food and Drink gave rise to 37.3% growth in Holland, though sales
were flat in Belgium.
Eastern Europe
In our Eastern European businesses (comprising Poland, the Czech
Republic and Slovakia, and Hungary), total SPWD declined by 9.4%,
whilst operating profit declined by 75.0%. In Poland, SPWD
increased by 3.0%. Key Accounts grew by 16%, and new contracts were
won with Imperial Tobacco and Pilkington. In the Czech Republic and
Slovakia, SPWD decreased by 32.9% due to a significant slowdown in
the OEM sector and a high level of staff turnover leading to
several lost contracts. Key Accounts were flat but continued to
offer significant growth opportunities. In Hungary, the SPWD growth
was 3.8%, and new contracts were won with Mercedes-Benz, Rockwool,
Delphi and PepsiCo.
Other segments
In respect of the other segments, Austria, Ireland and Italy,
SPWD declined by 7.2%, whilst operating profit declined by GBP0.8
million to a loss of GBP0.6 million. In Austria SPWD were down
14.3%, in Italy, SPWD were down 11.5% and in Ireland SPWD were up
32.4%.
Board
After more than ten years as Chairman of Brammer, David Dunn
stepped down at the Annual General Meeting in May. We were
delighted that Bill Whiteley agreed to take over at that time. Bill
joined Brammer's Board as a non-executive director in July 2008 and
we are fortunate to have someone of his quality and experience as
Chairman. Duncan Magrath (Chief Financial Officer Balfour Beatty
plc) joined the Board as a non-executive director on 1 March 2012.
We are delighted to welcome Duncan whose wide international
experience will be invaluable to the group.
The Executive Team and all at Brammer wish to thank David Dunn
for his outstanding contribution and leadership over the last ten
years.
The Future
Our European footprint and our specialisation in the field of
Bearings, Mechanical Power Transmission, Fluid Power and Tools and
General Maintenance products is a strong platform upon which to
achieve further market share gains in our fragmented marketplace.
We are finding many of our customers are seeking to buy additional
products from us, or accelerate contract implementation, to achieve
the cost savings available to them as part of their contract with
Brammer - and we have significantly increased the rate at which we
are able to deliver those savings.
Since 1 January 2008, Industrial production in the Eurozone has
declined by 9.2%. In contrast, Brammer's revenues have grown by
24.5% at constant currency excluding Buck & Hickman, and by
51.8% including Buck & Hickman. We believe that through the
further development of our four growth drivers, and the provision
of significant added value to our customers, we can continue to
outperform the market by at least 10% per annum even though
uncertain economic conditions may adumbrate continued tough trading
conditions. Our Key Account business remains strong, cross-selling
initiatives to both Key Accounts and the base business are
proceeding well and we expect to achieve healthy growth in 2013.
Moreover, we will continue to lead the consolidation of the
European market in Bearings, Mechanical Power Transmission, Fluid
Power, and Tools and General Maintenance products. As a result, we
are increasingly confident that our strategy will continue to give
us growth substantially greater than the market.
Brammer Preliminary results announcement
Consolidated income statement for the year ended 31 December
2012
Year to Year to
31 December 31 December
2012 2011
Note GBPm GBPm
Continuing operations
Revenue 2 639.6 571.5
Cost of sales (444.8) (398.2)
Gross profit 194.8 173.3
---------------------------------- ----- ------------- -------------
Distribution costs (164.0) (144.7)
Amortisation of acquired
intangibles (1.3) (1.3)
Total sales, distribution
and administrative costs (165.3) (146.0)
---------------------------------- ----- ------------- -------------
Operating profit 2 29.5 27.3
Operating profit before
amortisation and exceptional
items 37.2 31.8
Amortisation of acquired
intangibles (1.3) (1.3)
Exceptional items (6.4) (3.2)
------------- -------------
Operating profit 2 29.5 27.3
------------- -------------
Finance expense (2.8) (2.9)
Finance income 0.1 0.1
---------------------------------- ----- ------------- -------------
Profit before tax 26.8 24.5
Profit before tax before
amortisation and exceptional
items 34.5 29.0
Amortisation of acquired
intangibles (1.3) (1.3)
Exceptional items 4 (6.4) (3.2)
------------- -------------
Profit before tax 26.8 24.5
------------- -------------
Taxation (7.0) (6.2)
Profit for the year attributable
to equity shareholders 2 19.8 18.3
---------------------------------- ----- ------------- -------------
Earnings per share 3
Basic 16.9p 16.8p
Diluted 16.4p 16.4p
Earnings per share - pre
amortisation and exceptional
items 3
Basic 21.9p 19.8p
Diluted 21.2p 19.3p
---------------------------------- ----- ------------- -------------
Brammer
Consolidated statement of comprehensive income for the year
ended 31 December 2012
2012 2011
GBPm GBPm
Profit for the year 19.8 18.3
Other comprehensive income
Net exchange differences on translating foreign
operations (2.4) (3.1)
Actuarial losses on pension schemes (5.9) (4.2)
Effective portion of changes in fair value
of cash flow hedges (0.2) -
Other comprehensive expense for the year,
net of tax (8.5) (7.3)
Total comprehensive income for the year 11.3 (11.0)
------ -------
Items in the statement above are disclosed net of tax.
Brammer Consolidated balance sheetas at 31 December 2012
2012 2011
(restated)
Notes GBPm GBPm
Assets *
Non-current assets
Goodwill 89.8 90.0
Acquired intangible assets 10.4 11.7
Other intangible assets 8.9 7.4
Property, plant and equipment 14.8 13.4
Deferred tax assets 8.9 6.6
132.8 129.1
------------------------------------ ------ -------- ------------
Current assets
Inventories 97.7 88.1
Trade and other receivables 109.1 114.8
Cash and cash equivalents 6 2.2 15.9
209.0 218.8
------------------------------------ ------ -------- ------------
Liabilities
Current liabilities
Financial liabilities - borrowings 6 (3.2) (3.4)
Trade and other payables (121.9) (131.6)
Provisions (0.7) (1.3)
Deferred consideration (4.2) (10.8)
Current tax liabilities (4.7) (5.0)
(134.7) (152.1)
------------------------------------ ------ -------- ------------
Net current assets 74.3 66.7
Non-current liabilities
Financial liabilities - borrowings 6 (52.8) (47.8)
Deferred tax liabilities (8.8) (10.0)
Derivative financial instruments (0.3) -
Provisions (2.0) -
Deferred consideration (0.5) (3.6)
Retirement benefit obligations (21.7) (16.8)
(86.1) (78.2)
------------------------------------ ------ -------- ------------
Net assets 121.0 117.6
------------------------------------ ------ -------- ------------
Shareholders' equity
Share capital 23.5 23.4
Share premium 18.2 18.2
Translation reserve (1.1) 1.3
Cash flow hedging reserve (0.2) -
Retained earnings 80.6 74.7
Total equity 7 121.0 117.6
------------------------------------ ------ -------- ------------
*December 2011 balance sheet has been restated for fair value
adjustments to the assets and liabilities acquired with the Buck
& Hickman business on 30 September 2011.
Brammer Consolidated statement of changes in equity for the year
ended 31 December 2012
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
2011 21.3 18.1 (0.2) - 4.4 43.4 87.0
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Profit for the year - - - - - 18.3 18.3
Other comprehensive
income - - - - (3.1) (4.2) (7.3)
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Total comprehensive
income - - - - (3.1) 14.1 11.0
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Transactions with owners
Shares issued during
the year
placing* 2.1 - - - - 22.7 24.8
other - 0.1 - - - - 0.1
Purchase of own shares - - (0.1) - - - (0.1)
Transfer on vesting
of own shares - - 0.1 - - (0.1) -
Value of employee services - - - - - 2.0 2.0
Tax credit on share
performance plans - - - - - 0.7 0.7
Dividends - - - - - (7.9) (7.9)
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Total transactions
with owners 2.1 0.1 - - - 17.4 19.6
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Movement in year 2.1 0.1 - - (3.1) 31.5 30.6
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
At 31 December 2011 23.4 18.2 (0.2) - 1.3 74.9 117.6
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
Profit for the year - - - - - 19.8 19.8
Other comprehensive
expense - - - (0.2) (2.4) (5.9) (8.5)
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
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) -
Value of employee services - - - - - 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
----------------------------------- -------- -------- --------- --------- ------------ --------- -------
*Ordinarily, the excess of the net proceeds over the nominal
value of the share capital issued would be credited to a
non-distributable share premium account. However, the placing of
shares completed in September 2011 was effected through a structure
which resulted in the creation of a reserve of GBP22.7 million that
was credited to retained earnings under section 612 of the
Companies Act 2006. Following the finalisation of the Buck &
Hickman fair value adjustments, GBP17.4 million is considered to be
non-distributable.
Brammer Consolidated cash flow statement for the year ended 31
December 2012
2012 2011
Note GBPm GBPm
Cash generated from operations 5 25.2 28.2
Interest received 0.1 0.1
Interest paid (2.6) (2.5)
Tax paid (7.9) (4.1)
Funding of pension schemes less income
statement charge (2.3) (3.3)
Cash generated from operating activities 12.5 18.4
--------------------------------------------------- ----- ------- -------
Cash generated from operating activities
before exceptional items 15.9 19.1
Cash outflow from exceptional items (3.4) (0.7)
--------------------------------------------------- ----- ------- -------
Cash generated from operating activities 12.5 18.4
--------------------------------------------------- ----- ------- -------
Cash flows from investing activities
Acquisition of businesses (net of cash
acquired) (1.1) (26.9)
Deferred consideration paid on prior acquisitions (10.4) (1.8)
Proceeds from sale of property, plant and
equipment 0.2 0.5
Purchase of property, plant and equipment (4.7) (3.0)
Additions to other intangible assets (4.4) (3.3)
Net cash used in investing activities (20.4) (34.5)
--------------------------------------------------- ----- ------- -------
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital 0.1 0.1
Net proceeds from placing - 24.8
Repayment of loans under old financing
facility - (56.1)
Net drawdown of other loans 5.9 50.6
Net repayment of finance leases (0.1) (0.1)
Dividends paid to shareholders (10.2) (7.9)
Purchase of own shares (1.1) (0.1)
Net cash (absorbed)/generated from financing
activities (5.4) 11.3
--------------------------------------------------- ----- ------- -------
Net decrease in cash and cash equivalents (13.3) (4.8)
Exchange loss on cash and cash equivalents (0.3) (0.6)
Net cash at beginning of year 15.6 21.0
Net cash at end of year 2.0 15.6
--------------------------------------------------- ----- ------- -------
Cash and cash equivalents 2.2 15.9
Overdrafts (0.2) (0.3)
Net cash at end of year 2.0 15.6
--------------------------------------------------- ----- ------- -------
Brammer Accounting policies
General information
Brammer plc is a company incorporated and domiciled in the UK,
and listed on the London Stock Exchange. The address of the
registered office is disclosed in note 8.
The principal accounting policies adopted in the preparation of
these consolidated financial statements are unchanged from those
applied in the preparation of the 2011 statements, and will be set
out in full in the 2012 published financial statements. These
policies have been consistently applied to all the years
presented.
Basis of preparation
This preliminary announcement does not comprise statutory
accounts within the meaning of Section 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
under the historical cost convention, as modified for fair values
under IFRS.
Accounting policies
No standards have been early adopted by the group. The
implications for the group of new standards, amendments to
standards or interpretations which are mandatory for the first time
for the financial year ended 31 December 2012 are summarised
below.
New standards, amendments to standards or interpretations
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1 January 2012. They are not relevant or do not have
a material effect on the group's financial statements and are as
follows:
Standard or interpretation Content Applicable for financial
years beginning on
or after
--------------------------- -------------------------- -------------------------
Amendment: IFRS 7 Financial instruments: 1 July 2011
Disclosures on transfers
of assets
--------------------------- -------------------------- -------------------------
Amendment: IFRS 1 First time adoption, 1 July 2011
on fixed dates and
hyperinflation
--------------------------- -------------------------- -------------------------
Amendment: IAS 12 Income taxes: deferred 1 January 2012
tax
--------------------------- -------------------------- -------------------------
Standards, amendments and interpretations which have been issued
but are not yet effective, and in some cases have not yet been
endorsed by the EU, are as follows:
Standard or interpretation Content Applicable for financial
years beginning on
or after
--------------------------- ------------------------- -------------------------
IAS 28 (revised 2011)* Associates and joint 1 January 2013
ventures
--------------------------- ------------------------- -------------------------
IFRS 10 Consolidated financial 1 January 2014
statements
--------------------------- ------------------------- -------------------------
IFRS 11* Joint arrangements 1 January 2014
--------------------------- ------------------------- -------------------------
IFRS 12* Disclosures of Interests 1 January 2014
in Other Entities
--------------------------- ------------------------- -------------------------
IFRS 13* Fair Value Measurement 1 January 2013
--------------------------- ------------------------- -------------------------
IAS 19R (revised 2011) Employee benefits 1 January 2013
--------------------------- ------------------------- -------------------------
Amendment: IAS 1 Financial statement 1 July 2012
presentation: Other
comprehensive income
--------------------------- ------------------------- -------------------------
IAS 27 (revised 2011) Separate financial 1 January 2013
statements
--------------------------- ------------------------- -------------------------
Amendment: IFRS 7 Financial instruments 1 January 2013
--------------------------- ------------------------- -------------------------
Amendment: IAS 32 Financial instruments: 1 January 2014
Presentation
--------------------------- ------------------------- -------------------------
Amendment: IFRS 1* First time adoption 1 January 2013
--------------------------- ------------------------- -------------------------
*These standards are not expected to be relevant to the group
IAS 19R - Employee benefits - is likely to have a significant
impact on future financial statements when it is adopted.
Under IAS 19R the interest cost on the defined benefit
obligation, and the expected rate of return on plan assets, will be
replaced with a net interest charge that is calculated by applying
the discount rate to the net defined benefit liability. With effect
from 1 January 2013 this is likely to result in a higher charge
being recognised in the income statement. Preliminary indication is
that the impact of adopting IAS 19R will be an additional charge to
profit in 2013 of up to GBP1.0 million.
Brammer notes to the accounts
1. COMPARATIVE RESULTS
Comparative figures for the year ended 31 December 2011 are
taken from the company's statutory accounts which have been
delivered to the Registrar of Companies with an unqualified audit
report. Copies of the 2011 annual report and the 2012 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, and accordingly the
operating segments are unchanged from those previously
reported.
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 2012 the primary
management rate used was EUR1.20 : GBP1.
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 Other Total
Europe operating
segments
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 31
December 2012
Continuing operations
Revenue
Total revenue 287.2 118.0 88.5 43.6 54.3 48.8 16.7 657.1
Inter company
sales (3.8) (2.4) (0.8) (0.8) (1.2) (0.4) (0.4) (9.8)
Sales to external
customers 283.4 115.6 87.7 42.8 53.1 48.4 16.3 647.3
Exchange effect (7.7)
------
Total sales to
external customers 639.6
------
Underlying operating
profit 18.1 7.9 4.4 4.3 2.8 0.9 (0.6) 37.8
Exchange effect (0.6)
------
Total underlying
operating profit 37.2
Amortisation of
acquired intangibles (1.3)
Exceptional items (6.4)
Total operating
profit 29.5
Finance expense (2.8)
Finance income 0.1
Profit before
tax 26.8
Tax (7.0)
Profit for the
year 19.8
----------------------- ------ -------- ------- ------ -------- -------- ----------- ------
Segment assets 89.4 33.7 33.1 17.2 24.7 25.9 8.2 232.2
Exchange effect (1.7)
------
230.5
Goodwill 89.8
Acquired intangibles 10.4
Cash 2.2
Deferred tax 8.9
Total assets 341.8
----------------------- ------ -------- ------- ------ -------- -------- ----------- ------
2. SEGMENTAL ANALYSIS (continued)
UK Germany France Spain Benelux Eastern Other Total
Europe operating
segments
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Other segment
items
Continuing operations
Capital expenditure
- intangible assets 0.6 0.1 0.1 0.1 0.3 - 3.2 4.4
- property , plant
and equipment 2.2 0.2 0.5 0.2 0.5 0.3 0.8 4.7
Exchange effect -
-------
Total capital
expenditure 9.1
-------
Amortisation/depreciation
- intangible assets (0.1) (0.1) - - (0.2) - (1.9) (2.3)
- property, plant
and equipment (1.2) (0.2) (0.3) (0.3) (0.4) (0.4) (0.2) (3.0)
Exchange effect 0.2
-------
Total amortisation/depreciation (5.1)
-------
UK Germany France Spain Benelux Eastern Other Total
Europe operating
segments
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 31
December 2011
Continuing operations
Revenue
Total revenue 193.4 118.7 85.5 43.8 50.9 56.9 18.0 567.2
Inter company
sales (2.9) (3.2) (1.0) (0.9) (1.7) (0.1) (0.3) (10.1)
Sales to external
customers 190.5 115.5 84.5 42.9 49.2 56.8 17.7 557.1
Exchange effect 14.4
-------
Total sales to
external customers 571.5
-------
Underlying operating
profit 9.4 7.8 4.0 3.3 2.6 3.6 0.2 30.9
Exchange effect 0.9
-------
Total underlying
operating profit 31.8
Amortisation of
acquired intangibles (1.3)
Exceptional items (3.2)
Total operating
profit 27.3
Finance expense (2.9)
Finance income 0.1
Profit before
tax 24.5
Tax (6.2)
Profit for the
year 18.3
--------------------------------- ------ -------- ------- ------ -------- -------- ----------- -------
Segment assets 89.4 27.8 31.1 15.3 22.3 28.5 8.7 223.1
Exchange effect 0.6
-------
223.7
Goodwill 90.0
Acquired intangibles 11.7
Cash 15.9
Deferred tax 6.6
Total assets 347.9
--------------------------------- ------ -------- ------- ------ -------- -------- ----------- -------
Other segment
items
Continuing operations
Capital expenditure
- intangible assets 0.1 0.1 0.2 0.1 0.3 - 2.5 3.3
- property , plant
and equipment 1.0 0.2 0.2 0.4 0.4 0.6 0.1 2.9
Exchange effect 0.1
-------
Total capital
expenditure 6.3
-------
Amortisation/depreciation
- intangible assets (0.1) (0.1) - (0.1) (0.1) - (1.2) (1.6)
- property, plant
and equipment (0.9) (0.2) (0.3) (0.3) (0.4) (0.4) (0.3) (2.8)
Exchange effect -
-------
Total amortisation/depreciation (4.4)
-------
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
2012 2011
Management rate EUR1.20 EUR1.20
Actual average rate EUR1.230 EUR1.152
Year end rate EUR1.233 EUR1.192
3. EARNINGS PER SHARE
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 19.8 16.9p 16.4p
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 of acquired
intangibles and exceptional items 25.6 21.9p 21.2p
--------------------------------------------- --------- -------- --------
The increase in the weighted average number of shares in the
year reflects the full year impact of the 10,535,000 shares issued
by way of a placing in September 2011.
2011
-----------------------------
Earnings per
share
------------------
Earnings Basic Diluted
GBPm
Weighted average number of shares in issue
('000) 109,019 111,759
Total
Profit for the financial year 18.3 16.8p 16.4p
Amortisation of acquired intangibles 1.3
Exceptional items 3.2
Tax on exceptional items (0.9)
Tax on amortisation of acquired intangibles (0.3)
Earnings before amortisation of acquired
intangibles and exceptional items 21.6 19.8p 19.3p
--------------------------------------------- --------- -------- --------
4. EXCEPTIONAL ITEMS
2012
A total pre-tax operating exceptional charge of GBP6.4 million
has been recognised in 2012. As part of the continuing programme of
integrating the Buck & Hickman business, which was acquired on
30 September 2011, further lines of stock identified as no longer
integral to Brammer's core tools & general maintenance product
portfolio and future trading strategy were written down to their
estimated net realisable value. The resulting GBP0.8 million charge
has been recognised as an exceptional item. Software which will no
longer be developed or supported in the combined business going
forward has been written down to reflect its revised estimated
useful life resulting in a GBP0.8 million charge.
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.
2012 2011
GBPm GBPm
Included in operating profit
Stock written down 0.8 0.4
Write down of intangible assets 0.8 -
Headcount and other restructuring costs 4.8 1.5
Branch co-location costs - 0.8
Acquisition costs - 0.5
Total exceptional items 6.4 3.2
----------------------------------------- ----- -----
2011
Following the acquisition of the Buck & Hickman business in
September 2011, the following exceptional charges were recognised
in 2011. Acquisition costs of GBP0.5 million incurred, together
with GBP0.8 million of branch co-location costs and a GBP0.4
million charge for write-down of stock, being related costs
incurred up to 31 December 2011 in the first phase of integrating
the business with that of Brammer UK, were recognised as
exceptional costs in the income statement. In addition a further
charge of GBP1.5 million, the majority of which related to
restructuring actions taken in the wider group as first steps in
realising operational benefits from the acquisition, was also
included in the total pre-tax operating exceptional charge of
GBP3.2 million.
5. CASH FLOW FROM OPERATING ACTIVITIES
2012 2011
GBPm GBPm
Profit for the year attributable to
equity shareholders 19.8 18.3
Tax charge 7.0 6.2
Depreciation of tangible and intangible
assets 7.9 5.7
Share options - value of employee
services 2.0 2.0
Gain on sale of property, plant and
equipment (0.1) (0.3)
Financing expense 2.7 2.8
Movement in working capital (excluding
the effect of exchange movements and
fair value adjustments) (14.1) (6.5)
Cash generated from operations after
exceptional items 25.2 28.2
------- ------
6. CLOSING NET DEBT
2012 2011
GBPm GBPm
Borrowings - current (3.2) (3.4)
Borrowings - non-current (52.8) (47.8)
Cash and cash equivalents 2.2 15.9
Closing net debt (53.8) (35.3)
------- -------
7. CHANGES IN SHAREHOLDERS' EQUITY
The statement of changes in shareholders equity is shown as a
primary statement.
Purchase of own shares
During the period the company acquired 634,026 of its own shares
of 20p each through the Brammer plc Employee Share Ownership Trust
("the Trust") for an aggregate consideration of GBP1,136,676, which
has been deducted from shareholders' equity.
The shares are held by the Trust to meet vestings under the
group's performance share plans and share matching plans.
Tranches of these plans vested during the period and 806,794
shares were transferred to directors and senior managers in order
to meet vestings under these plans.
At 31 December 2012 the Trust held a total of 6,078 shares in
the company in order to meet part of the company's liabilities
under the performance share plans and share matching plans. The
Trust deed contains a waiver provision in respect of these
shares.
The number of ordinary 20p shares in issue at 31 December 2012
was 117,204,074 (31 December 2011: 116,944,074).
Dividends
A dividend, amounting to GBP6.7 million, which related to 2011
was paid on 5 July 2012 (2011: GBP4.8 million). An interim dividend
amounting to GBP3.5 million (2011: GBP3.1 million) was paid on 2
November 2012. The directors propose a final dividend of 6.4p per
share (2011: 5.7p) payable on 2 July 2013. This final dividend
amounting to GBP7.5 million (2011: GBP6.7 million) has not been
recognised as a liability in these financial statements.
Retained earnings as disclosed in the Balance Sheet above
represent the retained earnings and treasury share balances
above.
8. PRELIMINARY ANNOUNCEMENT
A copy of the preliminary announcement is available for
inspection at the registered office of the company, 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 19
February 2013.
9. FINAL DIVIDEND
Relevant dates concerning the payment of the final dividend
are:
Annual general meeting 17 May 2013
Record date 7 June 2013
Payment date 2 July 2013
10. 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 TPMMTMBABTJJ
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