RNS No 1094e
BRAMMER PLC
8 September 1999
1999 INTERIM RESULTS
Focus on Expansion in Europe
Brammer plc, the European industrial services group, today announces its
results for the six months ending 30 June 1999.
Highlights
1999 1998 Increase
Turnover #122.2m #117.3m 4.2%
Profit before interest #10.6m #13.6m (22.3)%
Profit before tax #10.1m #13.4m (24.3)%
Earnings per share 14.6p 19.4p (24.7)%
Dividend per share 6.2p 6.0p 3.3%
. Strong growth in sales and profits from Livingston and European
distribution activities was offset by weak market conditions faced by
UK distribution business.
. UK sales, at constant exchange rates, declined 5.6% while continental
European sales rose 21.3%. Europe now accounts for 41.4% of group
sales.
. Livingston made excellent progress with sales ahead 41.6% and operating
profit up 29.5%.
. The recently acquired calibration businesses in Holland, France and
Spain are making good progress and widening Livingston's external
customer base for calibration management.
Robert Ffoulkes-Jones, chairman, said:
"Although Livingston continues to move ahead strongly, the uncertain
conditions affecting our core UK distribution business make it difficult
to predict the outcome for the group for the year as a whole. We are not
planning for any real improvement in market conditions in the second half.
However, should manufacturing activity pick up, and there is some
indication that it may do so when the destocking phase ends, we would
expect to be early beneficiaries."
Enquiries: Brammer plc 0171 638 9571 (8.00am - 1.00pm)
0161 928 3363 (1.00pm - 4.30pm)
Robert Ffoulkes-Jones, chairman
Ian Fraser, chief executive
John Cumming, finance director
Citigate Dewe Rogerson Ltd 0171 638 9571
Martin Jackson / Duncan Murray
BRAMMER plc
1999 INTERIM RESULTS
CHAIRMAN'S STATEMENT
Results
Our first half bears the imprint of two different forces. The benefits of
our strategy to develop Livingston and our continental European activities
are clear in their strong growth in both sales and profits. This
improvement, however, was more than offset by the weak market conditions
faced by our UK distribution business.
In the six months to 30 June 1999, group profit before tax at #10.1 million
was 24.3% lower than the first half of 1998, but, at constant exchange rates,
marginally ahead of the second half of that year. This decline resulted in
earnings per share falling to 14.6p (1998 19.4p).
Group sales, at constant exchange rates, increased by 4.0% reflecting a
decline in the UK of 5.6% and an increase in continental Europe of 21.3%.
Our sales split is now 58.6% (1998 64.5%) from the UK and 41.4% (1998 35.5%)
from the continent.
Net cash flow from operating activities increased by #5.8 million as we
reduced the level of inventory in our distribution business to reflect
current demand. However, to support Livingston s rapid growth, our fixed
asset investment in rental inventory at the end of the period was a gross #71
million, up #26 million on the first half of last year.
Our distribution and administrative costs as a percentage of sales are up
from 26.1% to 28.2% on the comparable period last year as we continue to
support new initiatives and as the mix of our business has moved in favour of
Livingston. However, in response to weak market conditions, particularly in
the UK, management has put in place a significant cost reduction programme,
which will be cost neutral during the second half. The restructuring, which
will aim to reduce annual costs by some #2.5 million, will not adversely
affect the sharp end of our business. We will take advantage of greater
efficiencies made possible through improved processes.
As a measure of our continuing confidence, we have declared an interim
dividend of 6.2p, up 3.3% on last year, which will be paid on 11 November
1999 to all shareholders on the register at the close of business on 24
September 1999.
Distribution
Sales, at constant exchange rates, decreased by 5.7% and operating profit by
42.5% largely due to the difficult trading conditions faced by BSL in the UK
where our markets remain patchy with growth predicted to return to certain
sectors whilst others are still reporting severe trading conditions.
The continued strength of sterling has adversely affected many of BSL's
customers. General engineering, by way of example, has been particularly hard
hit whilst we have seen fairly flat conditions in the automotive sector but
some buoyancy amongst the utilities.
In the UK, we have concentrated our efforts in the first half on restoring
gross margins and have managed to reverse a falling trend.
In France we have been delighted with the success of our efforts to take a
greater share of the Paris market. However, in Spain we have had some
teething problems with our new IT systems although these are now largely
behind us.
Recognising the need for long term growth, we continue to invest
significantly in new products and services and in IT to provide operational
efficiencies. Our newer product ranges, including fluid power, have made
good progress and we will continue to broaden our range developing new market
potential and increasing growth opportunities.
Our proposed new central warehouse is starting to take shape and we should
open this facility next July, when we expect to achieve further operational
and cost efficiencies together with higher service levels.
Our Insite programme (a BSL service centre on the customer's premises) is
progressing well with eight sites now operational and further opportunities
identified.
IT systems will play a key role in our future and I am confident that the
developments we have underway will give us the flexibility to meet the
changing needs of the market. Trials have begun on Internet trading with two
major customers using our "Genius" system which some of you will have seen at
our last annual general meeting.
Our strategic review has given further impetus to our efforts to grow our
distribution business both geographically and by extending our range of
products and services. In July, we announced a 49% participation in KNS, a
leading distributor in Holland, having acquired a 25% interest in Rolamentos,
Portugal, in November 1998. We are now clear market leaders in Europe with
strong positions in the UK, France, Holland, Spain and Portugal. Our aim,
over the next three years, is to extend our leadership, which will involve
further acquisitions. It is our belief that keeping in step with our
suppliers and customers in providing Europe-wide coverage is essential for
Brammer's long term success.
Livingston
Livingston, our electronic equipment management business, made excellent
progress with sales and operating profit, at constant exchange rates, ahead
41.6% and 29.5% respectively. In the UK and continental Europe, sales were
well up with Germany and the Netherlands particularly strong. We have also
taken the opportunity to raise the profile of our equipment management
capability in our UK computer business, which is progressing well under our
new management team.
It is well worth noting that over the last five years, Livingston has grown
impressively with sales up from an annual rate of #30 million to #68 million
and gross investment in rental equipment up from #27 million to #71 million.
We have now achieved critical mass in almost all our markets and have
established a strong leadership position across Europe.
We now have equipment management contracts in all of the larger European
countries and with most of the leading computer manufacturers. Many of these
contracts are now dealt with via the Internet. Our contracts with KPN and
Thomson-CSF are progressing well. However, at this stage of their
implementation, they are absorbing cash and management resources. Our
recently acquired calibration businesses in Holland (from KPN Telecom),
France (from Thomson-CSF) and Spain (from Tektronix) are making good progress
and widening our external customer base for calibration management.
Current trading
Although Livingston continues to move ahead strongly, the uncertain
conditions affecting our core UK distribution business make it difficult to
predict the outcome for the group for the year as a whole. We are not
planning for any real improvement in market conditions in the second half.
However, should manufacturing activity pick up, and there is some indication
that it may do so when the destocking phase ends, we would expect to be early
beneficiaries.
Robert Ffoulkes-Jones
Chairman
8 September 1999
Brammer
Consolidated profit and loss account
The unaudited group results for the six months
Six months to June
1999
Existing Acquired Total
#'000 #'000 #'000
------------ ------------ ------------
Turnover 119,320 2,922 122,242
Cost of sales (76,344) (1,676) (78,020)
------------ ------------ ------------
Gross profit 42,976 1,246 44,222
Distribution costs (21,321) (150) (21,471)
Administrative expenses (12,164) (702) (12,866)
Amortisation of goodwill - (159) (159)
----------- ----------- -----------
Total administrative expenses (12,164) (861) (13,025)
----------- ----------- -----------
Operating profit 9,491 235 9,726
Share of associate's operating
profit 1 - 1
Profit on sale of fixed assets 827 - 827
----------- ----------- -----------
Profit on ordinary activities
before interest 10,319 235 10,554
Net interest (436)
------------ ------------ ------------
Profit on ordinary activities
before tax 10,118
Tax (3,200)
------------ ------------ ------------
Profit on ordinary activities
after tax being profit for the
financial period 6,918
Dividends (2,932)
------------ ------------ ------------
Profit for the period
retained in the business 3,986
------------ ------------ ------------
------------ ------------ ------------
Earnings per share
Basic 14.6p
Diluted 14.4p
------------ ----------- ------------
Dividend per share 6.2p
----------- ----------- ------------
Full year
1998 1998
Total Total
#'000 #'000
------------ ------------
Turnover 117,339 238,369
Cost of sales (73,390) (150,572)
------------ -------------
Gross profit 43,949 87,797
Distribution costs (20,396) (43,409)
Administrative expenses (10,286) (20,861)
Amortisation of goodwill - -
----------- -----------
Total administrative expenses (10,286) (20,861)
----------- -----------
Operating profit 13,267 23,527
Share of associate's operating
profit - (7)
Profit on sale of fixed assets 321 1,050
----------- -----------
Profit on ordinary activities
before interest 13,588 24,570
Net interest (217) (635)
----------- -----------
Profit on ordinary activities
before tax 13,371 23,935
Tax (4,212) (7,380)
------------ ------------
Profit on ordinary activities
after tax being profit for the
financial period 9,159 16,555
Dividends (2,822) (8,393)
------------ ------------
Profit for the period
retained in the business 6,337 8,162
------------ ------------
------------ ------------
Earnings per share
Basic 19.4p 35.2p
Diluted 19.0p 35.1p
------------ ------------
Dividend per share 6.0p 17.8p
------------ ------------
During 1998 the group consisted solely of existing businesses.
There is no significant difference between the results as disclosed above
and the results on an unmodified historic cost basis.
Brammer
Consolidated balance sheet
The unaudited group financial position as at
30 June 30 June 31 Dec
1999 1998 1998
#'000 #'000 #'000
------------ ------------ -----------
Fixed assets
Intangible assets 1,505 - 1,574
Tangible assets 65,216 50,270 59,953
Investment in associate 412 - 414
------------ ------------ -----------
67,133 50,270 61,941
------------ ------------ -----------
Current assets
Stock 30,891 39,399 33,218
Debtors 60,842 55,511 55,189
Cash and deposits 17,740 18,340 24,050
------------ ----------- ------------
109,473 113,250 112,457
Creditors - due within one year (64,607) (69,232) (66,112)
------------ ------------ ------------
Net current assets 44,866 44,018 46,345
------------ ------------ ------------
Total assets less current liabilities 111,999 94,288 108,286
Creditors - due after one year (37,755) (28,728) (37,648)
Provisions for liabilities and charges (4,185) (3,241) (4,344)
------------ ------------ ------------
Net assets employed 70,059 62,319 66,294
------------ ------------ ------------
Capital and reserves
Called up share capital 9,459 9,351 9,440
Shares to be issued - 16 -
Share premium account 1,523 1,304 1,307
Profit and loss account 59,077 51,648 55,547
------------ ------------ ------------
Shareholders'equity 70,059 62,319 66,294
------------ ------------ -----------
Brammer
Consolidated cash flow statement
The unaudited group cash flow for the six months
Six months Six months Full year
to 30 June to 30 June
1999 1998 1998
#'000 #'000 #'000
------------ ------------ ------------
Operating profit 9,726 13,267 23,527
Depreciation of tangible fixed assets 13,690 9,636 21,732
Amortisation of goodwill 159 - -
Movement in working capital (5,970) (11,110) (576)
------------ ------------ ------------
Net cash inflow from operating 17,605 11,793 44,683
activities ------------ ------------ ------------
Returns on investments and
servicing of finance
Interest received 145 489 799
Interest paid (683) (674) (1,359)
----------- ------------ ------------
(538) (185) (560)
------------ ------------ ------------
Tax paid (1,295) (808) (8,388)
------------ ------------ ------------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (28,363) (23,177) (47,692)
Sale of tangible fixed assets 6,044 6,121 12,074
------------ ------------ ------------
(22,319) (17,056) (35,618)
------------ ------------ ------------
Acquisitions and disposals
Purchase of business (745) - (421)
Net cash acquired 839 - -
------------ ------------ ------------
94 - (421)
Deferred consideration (2,569) (855) (855)
------------ ------------ ------------
(2,475) (855) (1,276)
------------ ------------ ------------
Equity dividends paid - - (6,405)
------------ ------------ ------------
Net cash outflow before management
of liquid resources and financing (9,022) (7,111) (7,564)
------------ ------------ ------------
Management of liquid resources
Deposits (567) 1,143 690
------------ ------------ ------------
Financing
Share options 217 237 236
SAYE scheme 12 65 68
Loans less than one year 401 122 (454)
Loans greater than one year 2,720 4,830 12,344
Finance leases (62) (60) (143)
------------ ------------ ------------
3,288 5,194 12,051
------------ ------------ ------------
(Decrease) / increase in cash (6,301) (774) 5,177
------------ ------------ ------------
Brammer
Consolidated statement of total recognised gains and losses
Six months Six months Full year
to 30 June to 30 June to Dec
1999 1998 1998
#'000 #'000 #'000
------------ ------------ ------------
Profit for the period 6,918 9,159 16,555
Exchange differences on foreign currency
net investments (406) (100) 201
------------ ------------ ------------
Total recognised gains and 6,512 9,059 16,756
losses for the period ------------ ------------ ------------
Notes to the accounts
1. Comparative results
Comparative figures for the year ended 31 December 1998 are taken from the
company's statutory accounts which have been delivered to the Registrar of
Companies with an unqualified audit report.
2. Segmental analysis
Six months ended 30 June
Turnover Profit before interest
1999 1998 1998 1999 1998 1998
Proforma Proforma
#'000 #' 000 #'000 #'000 #'000 #'000
-------- -------- -------- -------- -------- --------
Business
Distribution 88,151 93,508 93,368 5,646 9,823 9,822
Associate - - - 1 - -
Electronic
equipment
management 34,091 24,079 23,971 4,907 3,789 3,766
-------- ------- -------- -------- -------- --------
122,242 117,587 117,339 10,554 13,612 13,588
-------- -------- -------- -------- -------- --------
Geographic
United Kingdom 71,607 75,858 75,858 4,039 8,202 8,202
Associate - - - 1 - -
Other Europe 50,635 41,729 41,481 6,514 5,410 5,386
-------- -------- -------- -------- -------- --------
122,242 117,587 117,339 10,554 13,612 13,588
-------- -------- -------- -------- -------- --------
Net operating assets
1999 1998 1998
Proforma
#'000 #'000 #'000
----------- ------------ -----------
Business
Distribution 56,094 59,810 59,716
Associate 415 - -
Electronic equipment
management 51,897 34,352 34,188
------------ ------------ -----------
108,406 94,162 93,904
------------ ------------ -----------
Geographic
United Kingdom 56,197 54,590 54,590
Associate 415 - -
Other Europe 51,794 39,572 39,314
------------ ------------ ----------
108,406 94,162 93,904
------------ ------------ ----------
The proforma figures for 1998 represent the group s results for 1998
translated at the rates of exchange which ruled as at 30 June 1999.
3. Acquisitions
On 31 December 1998 a company was formed in Holland, 40% owned, but
controlled, by the group, to acquire the calibration related assets and
business of KPN Telecom. On 15 March 1999 the group acquired a 50.1%
interest in Thomson-CSF Instrumentation Services SA. Details of these
acquisitions are shown in notes 18 and 19 to the group s 1998 annual
report.
On 25 May 1999 the group announced that it had acquired the assets of the
commercial calibration division of Tektronix Espana ("Tektronix").
Tektronix is a leading manufacturer of test and measurement equipment.
The group has also won an outsourcing contract to be the Authorised
Service Provider of calibration and repair services to Tektronix and its
customers in Spain.
The results of the above three companies are shown in the "acquired"
column on the profit and loss account.
On 8 July 1999 the group announced that it had acquired a 49% interest in
KNS Aandrijftechniek B.V. ("KNS"), based in Holland, for a maximum
consideration of Dutch Guilders ("NLG") 4.2 million (#1.2 million) in cash.
In addition, Brammer will lend KNS up to NLG 2.5 million (#740,000) to
repay vendor loans and provide working capital.
KNS, whose business is similar to that of Brammer's distribution division,
operates in the Netherlands, Belgium, Austria and Germany. Its customer
base includes a broad range of industrial companies and it is an
authorised distributor for some of the world's leading bearing
manufacturers, a number of whom are common to the group.
4.Reconciliation of net cash flow to movement in net debt
Six months Six months Full year
to 30 June to 30 June to 31 Dec
1999 1998 1998
#'000 #'000 #'000
------------ ------------ ------------
(Decrease) / increase in cash in (6,301) (774) 5,177
the period
Cash inflow from increase in debt
and lease financing (2,441) (6,035) (12,437)
------------ ------------ ------------
(8,742) (6,809) (7,260)
New finance leases (51) - -
Loans acquired with subsidiaries - - -
Translation differences 3,002 477 (2,301)
------------ ------------ ------------
Movement in net funds (5,791) (6,332) (9,561)
Net funds at 31 December 1998 (13,048) (3,487) (3,487)
------------ ------------ ------------
Net funds at 30 June 1999 (18,839) (9,819) (13,048)
------------ ------------ ------------
5.Millennium & Euro
The process of addressing the year 2000 computer and instrumentation issue,
referred to in the 1998 financial review, has continued during the first
half of 1999. As part of this process we have now estimated that the total
cost of the programme, over and above normal on-going upgrade expenditure,
will be #527,000 of which #343,000 has already been incurred and charged to
the profit and loss account. As stated in the 1998 financial review the
complexities of the issue are such that it is not possible to guarantee
full year 2000 compliance prior to 1 January 2000. However, the directors
are confident that the internal risks have materially reduced.
The impact on the group of the introduction of the Euro at the beginning of
this year has also been assessed. Each company has implemented a programme
to address the problems that have been identified. We have estimated that
the total cost of amending our systems to be able to handle the Euro at
#74,000 of which #46,000 has already been incurred and charged to the
profit and loss account. For the group as a whole, we will continue with
our current foreign currency hedging techniques using financial instruments
that may be designated in Euros as well as other currencies where
appropriate.
6.Interim announcement
A copy of the interim announcement is available for inspection at the
registered office of the company, 1 Tabley Court, Victoria Street,
Altrincham, Cheshire WA14 1EZ and the offices of Citigate Dewe Rogerson
Ltd, 3 London Wall Buildings, London Wall, London EC2M 5SY, and will be
posted to shareholders.
7.Interim dividend
Relevant dates concerning the payment of the interim dividend are
Record date 24 September 1999
Payment date 11 November 1999
END
IR DBGBCUGGCCCR
Brammer (LSE:BRAM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Brammer (LSE:BRAM)
Historical Stock Chart
From Jul 2023 to Jul 2024