Braime Group Plc Regulatory News (BMTO)

17 Apr 2012 14:11

T.F. & J.H. BRAIME (HOLDINGS) P.L.C.

(`Braime' or the 'company' and with it subsidiaries the `group')

ANNUAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2011

At a meeting of the directors held yesterday, the accounts for the year ended 31st December 2011 were submitted and approved by the directors. The preliminary accounts statement is as follows:

Chairman's statement

Performance of group companies

Sales revenue increased by 11% continuing the steady growth achieved over the past five years, albeit at a slower pace, increasing from £18.10m in 2010 to £ 20.10m in 2011. In contrast profit before tax fell from £1.36m to £1.24m. After an increase in tax payable, the profit after tax reduced by 14% from the record high of £945,000 in 2010 to £814,000 for the year ending 31st December 2011.

The drop in profitability was due primarily to a reduction in our gross margin in the second half of the year. This was caused, in part, by the strengthening of the pound against the euro, which reduced the margin on goods sold in euros and, secondly, by the continuing steep increases in the cost of raw materials, where, in a highly competitive market, we were unable to pass on immediately the increases in the cost of our products.

The directors paid a first interim dividend of 2.40p on 14th October 2011, unchanged from the previous year. In view of the continuing underlying sales increase and the benefits which will accrue in 2012 from new product lines coming on stream, the directors paid a second interim dividend of 5.40p on 2nd April 2012, making a total for the tax year ending 5th April 2012 of 7.80p, compared to 7.20p in the previous tax year.

Braime Pressings Limited, manufacturer of deep drawn metal presswork

The company continued to make a loss despite the successful implementation of capital projects to reduce manufacturing costs. Huge efforts were made by our small management, development and maintenance teams to bring on stream the new product lines on which the future of the business depends but their introduction was again subject to further unforeseen delays.

However, since the start of 2012, considerable progress has been made. Production has now started on one of the new product ranges, final production trials on a second range of products has been successfully completed and we are now waiting for a bulk schedule from our customer, which is expected in April. We are close to completing production trials on the third new range and hope to be in full production by June/July of this year. Once all these new lines are on stream, we finally expect Braime Pressings Limited to return to profitability.

4B division, distributor worldwide of components and monitoring systems for the material handling industry

Overall sales revenue continued to grow but in 2011 the individual performance of the subsidiaries within the 4B division varied significantly due to the differing regional impact on each subsidiary of the current economic crisis and of the steep rise of commodity prices.

For the first time in many years the sales and profitability of our US subsidiary were largely flat, whereas all the other subsidiaries achieved significant sales growth. Some of the subsidiaries also increased profitability but those operating primarily in the euro zone saw their margins eroded by the effect of the fall in the value of the euro and by fierce competition in a market badly affected by recession.

Trade in the first quarter of 2012 has begun very positively. There continues to be major investment in the primary processing of food and the USA appears to be coming out of recession. Nevertheless, given the current crisis in Europe and the global instability of both currencies and raw material prices, it is almost impossible to predict with any level of confidence what will be the final outcome for the 4B division in 2012

Investment

The company has continued its high level of investment in its manufacturing facility, in developing new products and in expanding its global distribution.

In January of this year our USA subsidiary relocated to bespoke premises with 8,000 sq ft of offices and 45,000 sq ft of warehousing, providing the facilities which it needs to continue its growth.

In 2011, £600,000 was invested in plant and machinery, of which £280,000 was financed by HP and £320,000 financed from earnings. The company has existing capital commitments of £150,000 for further capital investment in 2012. Expenditure on R & D in 2011 was £225,000.

Cash flow and debt

The company was cash negative in 2011 by £439,000 due partly to the exceptional level of capital investment and by the need to finance the increase in sales revenue, while the net increase in trade debtors grew in line with the increase in group sales revenue. However inventories grew by £808,000, reflecting the increase in the cost of raw materials and components purchased for resale and stocks in the fledgling subsidiaries. This also follows an increase in stocks in 2010 of £730,000.

The overall effect of the exceptional level of capital investment and the increase in working capital led to an increase in our bank borrowings of £ 469,000 and to an increase in HP finance of £90,000.

In 2012 we are investing in the installation of an ERP computer system. One of the many benefits of this will be to increase our ability to control our stock levels in what is now a global business and this is fundamental to the future expansion of the business.

Staff

All the business sectors in which we operate are exposed to global competition and to survive and grow it is no longer enough to be good at what we do; we have to be exceptional and to change and improve constantly. This presents an enormous challenge for our dedicated and determined staff all across the group and we thank them for their continuing support and loyalty.

David Brown, our Financial Director for just over 31 years retired on 10th April 2012. David has always been a source of wise and independent advice to both the individual directors and to the board as a whole and we are all indebted to him for his contribution and loyalty.

David has had to cope with enormous changes in the focus of the group as it has transformed itself into a global business operating in many locations and in many currencies and, in parallel, he has had to comply with the complex and often baffling changes in the regulatory regime which have been imposed on even small businesses such as ourselves. We will miss David's intellect and dry sense of humour!

Marcus Mills joined the company on 13th February 2012 as Financial Controller and it is anticipated he will be David's successor as Financial Director. Marcus, although only 38, comes to us with outstanding qualifications and a proven track record. We believe he will bring to us the benefits of his enthusiasm, training and experience.

I would also like to pay tribute to Jim Mawson, our Senior Technical Manager of 4B, colleague and personal friend who died recently on 12th February. Jim joined the company in July 1983 at the mere age of 60 and retired finally in July of last year after 29 years with the company. He played a major part in the establishment of our US business and indeed of the development of the 4B division. He was recognised across the world as one of the leading experts in our field of bulk material handling and is missed by both his work colleagues and the many business friends that he made across the world.

Outlook

Providing that the anticipated volume of business from the existing and new product lines materialise and that the further new ranges of products come on stream at the times we now predict, the contribution from Braime Pressings Limited to the group result should be significant.

While the year has started positively in all the subsidiaries which make up 4B, it is extremely difficult to forecast the result for 2012 , given the current economic uncertainty and volatility in exchange rates. Moreover the level of competition we face grows ever stronger.

Overall, we are reasonably confident that in 2012 the group can at least repeat the result for 2011.

Summarised Consolidated Income Statement for the year ended 31st December 2011

(audited) Note 2011 2010 £ £ Revenue 20,067,905 18,057,661 Changes in inventories of finished goods and 777,134 647,108 work in progress Raw materials and consumables used (11,791,200) (10,358,951) Employee benefits costs (4,132,824) (3,841,811) Depreciation expense (395,200) (286,938) Other expenses (3,210,533) (2,804,022) Profit from operations 1,315,282 1,413,047 Finance costs (345,455) (302,445) Finance income 274,406 250,776 Profit before tax 1,244,233 1,361,378 Tax expense (430,212) (416,240) Profit for the year attributable to equity 814,021 945,138 shareholders of the parent company Basic and diluted earnings per share 1 56.53p 65.63p Summarised Consolidated Statement of Comprehensive Incomefor the year ended 31st December 2011(audited) 2011 2010 £ £ Profit for the year 814,021 945,138 Actuarial losses recognised directly in equity (50,000) (168,000) Foreign exchange gains/(losses) on 48,467 (33,254)re-translation of overseas operations Adjustment in respect of minimum funding (31,000) 137,000 requirement per IFRIC14 Other comprehensive income for the year (32,533) (64,254) Total comprehensive income for the year 781,488 880,884 Summarised Consolidated Balance Sheet at 31st December 2011(audited) Note 2011 2011 2010 2010 £ £ £ £ Assets Non-current assets Property, plant and 1,426,995 1,223,980 equipment Goodwill 12,270 12,270 Employee benefits - - Total non-current 1,439,265 1,236,250 assets Current assets Inventories 4,401,733 3,593,680 Trade and other 3,507,494 3,291,602 receivables Cash and cash 1,746,464 1,844,934 equivalents Total current assets 9,655,691 8,730,216 Total assets 11,094,956 9,966,466 Liabilities Current liabilities Bank overdraft 1,485,757 1,145,421 Trade and other 2,656,483 2,707,169 payables Other financial 350,859 291,553 liabilities Corporation tax 114,319 171,054 liability Total current 4,607,418 4,315,197 liabilities Non-current liabilities Financial liabilities 547,473 389,012 Total non-current 547,473 389,012 liabilities Total liabilities 5,154,891 4,704,209 Total net assets 5,940,065 5,262,257 Capital and reserves attributable to equity holders of the parent company Share capital 360,000 360,000 Capital reserves 77,319 77,319 Foreign exchange 334,759 286,292 reserve Retained earnings 5,167,987 4,538,646 Total equity 5,940,065 5,262,257

Summarised Consolidated Cash Flow Statement for the year ended 31st December

2011(audited) Note 2011 2011 2010 2010 £ £ £ £ Operating activities Net profit 814,021 945,138 Adjustments for: Depreciation 395,200 286,938 Grants amortised (1,656) (1,656) Foreign exchange gains/ 47,391 (37,785) (losses) Investment income (274,406) (250,776) Interest expense 345,455 302,445 Gain on sale of plant, (21,617) (35,357) machinery and motor vehicles Adjustment in respect (74,000) (22,000) of defined benefits scheme Income tax expense 430,212 416,240 846,579 658,049 Operating profit before 1,660,600 1,603,187 changes in working capital and provisions Increase in trade and (215,892) (891,218) other receivables Increase in inventories (808,053) (731,531) (Decrease)/increase in (50,686) 713,331 trade and other payables (1,074,631) (909,418) Cash generated from 585,969 693,769 operations Income taxes paid (486,947) (270,401) Investing activities Purchases of plant, (320,241) (210,154) machinery and motor vehicles Sale of plant, 21,620 35,358 machinery and motor vehicles Interest received 4,406 4,776 (294,215) (170,020) Financing activities Proceeds from long term 133,196 - borrowings Repayment of hire (190,674) (197,871) purchase creditors Interest paid (82,455) (65,445) Dividends paid (103,680) (77,760) (243,613) (341,076) Decrease in cash and (438,806) (87,728)cash equivalents Cash and cash 699,513 787,241 equivalents, beginning of period Cash and cash 260,707 699,513 equivalents, end of period

Consolidated statement of changes in equity for the year ended 31st December

2011(audited) Foreign Share Capital Exchange Retained Capital Reserve Reserve Earnings Total £ £ £ £ £ Balance at 1st January 360,000 77,319 319,546 3,702,268 4,459,133 2010 Comprehensive income Profit - - - 945,138 945,138 Other comprehensive income Actuarial gains - - - (168,000) (168,000)recognised directly in equity Foreign exchange losses - - (33,254) - (33,254)on re-translation of overseas operations Adjustment in respect of - - - 137,000 137,000 minimum funding requirement per IFRIC14 Total other comprehensive - - (33,254) (31,000) (64,254)income Total comprehensive - - (33,254) 914,138 880,884 income Transaction with owners Dividends - - - (77,760) (77,760) Total transactions with - - - (77,760) (77,760)owners

Balance at 31st December 360,000 77,319 286,292 4,538,646 5,262,257 2010

Balance at 1st January 360,000 77,319 286,292 4,538,646 5,262,257 2011 Comprehensive income Profit - - - 814,021 814,021 Other comprehensive income Actuarial losses - - - (50,000) (50,000)recognised directly in equity Foreign exchange losses - - 48,467 - 48,467 on re-translation of overseas operations Adjustment in respect of - - - (31,000) (31,000)minimum funding requirement per IFRIC14 Total other comprehensive - - 48,467 (81,000) (32,533)income Total comprehensive - - 48,467 733,021 781,488 income Transaction with owners Dividends - - - (103,680) (103,680) Total transactions with - - - (103,680) (103,680)owners

Balance at 31st December 360,000 77,319 334,759 5,167,987 5,940,065 2011

Notes

1. Earnings per share and dividends

Both the basic and diluted earnings per share have been calculated using the net results attributable to shareholders of T.F. & J.H. Braime (Holdings) P.L.C. as the numerator.

The weighted average number of outstanding shares used for basic earnings pershare amounted to 1,440,000 (2010 - 1,440,000). There are no potentiallydilutive shares in issue. Dividends paid 2011 2010 £ £ Equity shares Ordinary shares Interim of 4.80p (2010 - 3.00p) per share paid on 23,040 14,400 1st April 2011 Interim of 2.40p (2010 - 2.40p) per share paid on 11,520 11,520 14th October 2011 34,560 25,920 'A' Ordinary shares Interim of 4.80p (2010 - 3.00p) per share paid on 46,080 28,800 1st April 2011 Interim of 2.40p (2010 - 2.40p) per share paid on 23,040 23,040 14th October 2011 69,120 51,840 Total dividends paid 103,680 77,760 2. Cash and cash equivalents 2011 2010 £ £ Cash at bank and in hand 1,746,464 1,844,934 Bank overdrafts 1,485,757 1,145,421 260,707 699,513 3. Major non-cash transaction

During the year the group acquired tangible assets subject to finance of £ 281,170 (2010 - £53,050) under hire purchase agreements.

4. Segmental information Central Manufacturing Distribution Total 2011 2011 2011 2011 £ £ £ £ Revenue External - 2,510,726 17,557,179 20,067,905 Inter company 61,443 3,026,539 1,828,853 4,916,835 Total 61,443 5,537,265 19,386,032 24,984,740 Profit EBITDA (12,901) 274,159 1,449,224 1,710,482 Finance costs (14,812) (301,808) (28,835) (345,455) Finance income 1,679 272,722 5 274,406 Depreciation - (322,728) (72,472) (395,200) Tax expense (23,079) - (407,133) (430,212) (Loss)/profit for the (49,113) (77,655) 940,789 814,021 period Assets Total assets 810,551 2,874,795 7,409,610 11,094,956 Additions to non current - 396,164 205,247 601,411 assets Liabilities Total liabilities 526,570 1,849,717 2,778,604 5,154,891 Central Manufacturing Distribution Total 2010 2010 2010 2010 £ £ £ £ Revenue External - 2,126,262 15,931,399 18,057,661 Inter company 64,743 2,787,705 1,606,740 4,459,188 Total 64,743 4,913,967 17,538,139 22,516,849 Profit EBITDA (15,617) 125,391 1,590,211 1,699,985 Finance costs (14,493) (267,354) (20,598) (302,445) Finance income 1,719 248,699 358 250,776 Depreciation - (249,366) (37,572) (286,938) Tax expense (21,450) 5,545 (400,335) (416,240) (Loss)/profit for the (49,841) (137,085) 1,132,064 945,138 period Assets Total assets 766,618 2,846,980 6,352,868 9,966,466 Additions to non current - 199,946 63,258 263,204 assets Liabilities Total liabilities 480,636 2,063,659 2,159,914 4,704,209 5. Basis of preparation

The preliminary announcement has been prepared in accordance with applicable 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 accounting policies adopted are consistent with those of the annual financial statements for the year ended 31st December 2010, as described in those annual financial statements.

The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention.

6. Annual general meeting

The annual general meeting of the company will be held in Leeds on Friday 25th May 2012. Full details will be included in the published annual report and financial statements, which will be sent to shareholders by the 26th April 2012 and will also be available on the company's web-site (www.braimegroup.com) from that date.

7. Preliminary statement

The financial statements set out in the preliminary announcement do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The financial information for the year ended 31st December 2011 has been extracted from the group's financial statements upon which the auditor's opinion is unqualified, does not include reference to any matters to which they wish to draw attention by way of emphasis without qualifying their report, and does not include any statement under section 498 of the Companies Act 2006. Statutory accounts for the year ended 31st December 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course.

Approved by the Board 16 April 2012

For further information please contact:

T.F. & J.H. Braime (Holdings) P.L.C.

A. Q. Braime A.C.A. - Operations Director

0113 245 7491W. H. Ireland LimitedKaty Mitchell LLB0113 394 6628