Braime (T.F.& J.H.) - Final Results
26/04/2017 11:49
RNS Number : 4084D
Braime (T.F.& J.H.) (Hldgs) PLC
26 April 2017
T.F. & J.H. BRAIME (HOLDINGS) P.L.C.
("Braime" or the "company" and with its subsidiaries the "group")
ANNUAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2016
At a meeting of the directors held today, the accounts for the year ended 31st December 2016 were submitted and approved by the directors. The accounts statement is as follows:
Chairman's statement
Overall performance of the group
Sales revenuein 2016 increased by 7.3% to 28.4m compared to 26.5m in 2015 and the profit from operations increased to 1.4m from 0.9m in the previous year.
The profit before tax in 2016 reduced to 1.27m compared to 1.95m in 2015 however the prior year result had benefitted from the exceptional profit of 1.16m from the sale of part of the Hunslet site.
Results from some subsidiaries of the group were below expectations but the performance in other parts of the group more than offset this and, overall, the 2016 result was positive. The group also benefited, like many UK exporters, from the immediate fall in pound sterling following the result of the EU Referendum.
Dividends
The directors have decided to increase the total dividend for 2016 by 2.2% to 9.30p. The first interim dividend of 2.90p, paid in October 2016, was unchangedbut the second interim dividend will be increased to 6.40p (2015 - 6.20p). Accordingly, an interim dividend of 6.40p per Ordinary and 'A' Ordinary share will be paid on 12th May 2017 to shareholders on the record on 5th May 2017.
Capex
During 2016, the group invested 1.1m in plant and equipment. Further major investments are planned for 2017, focusing on improving productivity in manufacturing and extending our overseas distribution. The final 'go ahead' for these investments and their timing are dependent on maintaining adequate cash flow and the availability of long term finance.
Cash flow
Continuous monitoring of the cash flow and the headroom between the actual borrowingsand the agreed maximum borrowing facility with our bankers is increasingly important. Although the group hasdistinct 'seasonal' periods when outgoings peak, the timing of payments for exceptional purchases fluctuate throughout the year.
In 2016, the group generated a 1.9m cash inflow from operations and, after taking account of the net increase in working capital required, the payment of other financial costs and the dividend, the group was cash positive by 427,000.
The group revenue continues to grow year on year. To do so in 2016 it required an increase in both stocks and debtors, by 400,000 and 208,000 respectively, although the increase in debtors was more than offset by an increase in the creditors of 272,000.
Group stocks increased by 7.0%, roughly in line with the 7.3% increase in sales revenue,but overall group stocks remain high. Reducing them is an important potential source of funds required for ongoing investment, while maintaining adequate stock is a pre-requisite of achieving the all-important delivery performance required by our customers. Achieving this balance is a never-ending battle and rightly remains a key individual responsibility for the managing directors of each subsidiary and for the group directors.
Staff
The positive and proactive contribution of all individual staff at all levels and in all parts of the group is crucial to the continuing success of the business.
Every year customers look for improvements in pricingand for higher standards of quality and delivery. This puts pressure on management, office staff and on everyone involved in production. This in turn impacts family life as many of our technicaland sales staff are required to spend more time travelling away from home.
We thank them all for their ongoing effort.
Braime Pressings Limited
The new transfer line came on stream in the third quarter of 2016 but initially did not achieve its potential throughput. Combined with exceptional demand, this resulted in additional shifts which disproportionally increased manufacturing costs and resulted in a disappointing result. With the significant contribution being made by new senior staff, the situation is gradually improving in 2017.
Additionally the company has secured a large contract for a new product line which we are confident we can produce competitively based on our existing skill set. When this product comes on stream in late 2017, it will make a major positive contribution.
4B material handling division
The results from the subsidiaries making up the 4B division were mixed in 2016.
4B USA,operating in both North and South America, enjoyed a strong year, as did both 4B Africa and 4B Australia. In contrast,4B France had a poor year due to weak demand resulting from a lower than expected harvest. The result from the UK division, 4B Braime, was initially damaged by the very high value of sterling in the first half of 2016 and only partially rectified in the second part of 2016 by the effective 10% devaluation in June. 4B Asia Pacific faced major additional short term costs but is now meeting our positive long term expectations.
Overall the 4B group had a positive year which illustrates the benefit provided by the diversity of products it offers to customers and the wide range of industries and regions which make up its customer base.
Brexit
As 80% of group sales are made in overseas markets, the company benefited substantially from the steep fall in the value of pound sterling following the referendum. The lower value of sterling considerably increased the margins both on direct overseas sales and those made through an overseas subsidiary. Additionally, the contribution of the individual overseas subsidiaries are enhanced when converted back into sterling and consolidated in the group result.
The medium term effects of Brexit will be much more complex. The company imports the majority of its raw materials for manufacture and imports some products for re-sale in the UK. In both cases,it will be difficult to pass on the magnitude of these cost increases to customers.
Where the company buys products from overseas suppliers in euros or dollars and then resells the products in export markets, the effect may be neutral - but may not be if the products involved have to be imported and processed first in the UK before being re-exported. The company may have to look at different locations for stocking and processing products. Until agreements are finalised with the EU, and probably beyond that, there is going to remain a great deal of uncertainty as to the overall effect on the group.
That said, only 25% of group sales are made to the EU compared to 55% to other overseas markets and the likelihood is that the group will be a major beneficiary from Brexit. Moreover, the group had already identified the overseas markets outside the EU as the regions with the greatest potential for future growth and has for some time been focused on their development. Brexit offers a major opportunity that the group needs to seize.
Ironically the one major risk is that the currency market itself decides that on balance the UK is going to be a long term "winner" from Brexit and the fall in the pound is reversed,just at the same timeas the UK facesnew tariffs. In the long term, the level of the pound relative to other currencies is likely to play a bigger factor than the possible implementation of tariffs by the EU.
Outlook
We continue to invest in the future, in improving productivity, in developing new marketsand in introducing new innovative products.
In spite of the current level of uncertainty and ever increasing competition, the group has started this financial year positively and overall is currently performing ahead of both last year and the 2017 budget.
O. N. A. Braime, Chairman
26th April 2017
For further information please contact:
T.F. & J.H. Braime (Holdings) P.L.C.
Nicholas Braime
0113 245 7491
W. H. Ireland Limited
Katy Mitchell/Nick Prowting
0113 394 6628
Summarised consolidated income statement for the year ended 31st December 2016 (audited)
| 2016 | 2015 | |
| Revenue | 28,415,449 | 26,470,084 |
| Changes in inventories of finished goods and work in progress | 337,116 | 886,480 |
| Raw materials and consumables used | (15,890,401) | (15,529,776) |
| Employee benefits costs | (6,726,428) | (6,022,492) |
| Depreciation expense | (801,376) | (758,589) |
| Other expenses | (3,940,015) | (4,148,272) |
| Profit from operations | 1,394,345 | 897,435 |
| Profit on disposal of tangible fixed assets | - | 1,158,140 |
| Finance expense | (150,142) | (116,830) |
| Finance income | 29,902 | 11,726 |
| Profit before tax | 1,274,105 | 1,950,471 |
| Tax expense | (419,588) | (408,937) |
| Profit for the year | 854,517 | 1,541,534 |
| Profit attributable to: | ||
| Owners of the parent | 932,101 | 1,584,748 |
| Non-controlling interests | (77,584) | (43,214) |
| 854,517 | 1,541,534 | |
| Basic and diluted earnings per share | 59.34p | 107.05p |
| 2016 | 2015 | |
| Profit for the year | 854,517 | 1,541,534 |
| Items that will not be reclassified subsequently to profit or loss | ||
| Net pension remeasurement gain on post employment benefits | 10,000 | 10,000 |
| Items that may be reclassified subsequently to profit or loss | ||
| Foreign exchange gains/(losses) on re-translation of overseas operations | 597,976 | (146,822) |
| Other comprehensive income for the year | 607,976 | (136,822) |
| Total comprehensive income for the year | 1,462,493 | 1,404,712 |
| Total comprehensive income attributable to: | ||
| Owners of the parent | 1,540,077 | 1,447,926 |
| Non-controlling interests | (77,584) | (43,214) |
| 1,462,493 | 1,404,712 |
| 2016 | 2016 | 2015 | 2015 | ||
| Assets | |||||
| Non-current assets | |||||
| Property, plant and equipment | 5,357,772 | 4,677,456 | |||
| Goodwill | 12,270 | 12,270 | |||
| Financial assets | - | 51,877 | |||
| Total non-current assets | 5,370,042 | 4,741,603 | |||
| Current assets | |||||
| Inventories | 6,119,495 | 5,719,654 | |||
| Trade and other receivables | 5,213,019 | 5,005,099 | |||
| Financial assets | 51,877 | 57,777 | |||
| Cash and cash equivalents | 742,474 | 931,018 | |||
| Total current assets | 12,126,865 | 11,713,548 | |||
| Total assets | 17,496,907 | 16,455,151 | |||
| Liabilities | |||||
| Current liabilities | |||||
| Bank overdraft | - | 615,038 | |||
| Trade and other payables | 4,181,683 | 4,053,220 | |||
| Other financial liabilities | 1,730,288 | 1,498,171 | |||
| Corporation tax liability | 146,703 | 66,854 | |||
| Total current liabilities | 6,058,674 | 6,233,283 | |||
| Non-current liabilities | |||||
| Financial liabilities | 1,360,947 | 1,363,524 | |||
| Deferred income tax liability | 117,724 | 230,235 | |||
| Total non-current liabilities | 1,478,671 | 1,593,759 | |||
| Total liabilities | 7,537,345 | 7,827,042 | |||
| Total net assets | 9,959,562 | 8,628,109 | |||
| Share capital | 360,000 | 360,000 | |||
| Capital reserve | 257,319 | 257,319 | |||
| Foreign exchange reserve | 539,395 | (58,581) | |||
| Retained earnings | 9,005,528 | 8,194,467 | |||
| Total equity attributable to the shareholders of the parent | 10,162,242 | 8,753,205 | |||
| Non-controlling interests | (202,680) | (125,096) | |||
| Total equity | 9,959,562 | 8,628,109 | |||
| 2016 | 2016 | 2015 | 2015 | |
| Operating activities | ||||
| Net profit | 854,517 | 1,541,534 | ||
| Adjustments for: | ||||
| Depreciation | 801,376 | 758,589 | ||
| Grants amortised | (6,568) | (1,656) | ||
| Foreign exchange gains/(losses) | 525,324 | (146,677) | ||
| Finance income | (29,902) | (11,726) | ||
| Finance expense | 150,142 | 116,830 | ||
| Gain on sale of land and buildings, plant, machinery and motor vehicles | (12,538) | (1,158,140) | ||
| Adjustment in respect of defined benefits scheme | 12,000 | 13,000 | ||
| Income tax expense | 419,588 | 408,937 | ||
| Income taxes paid | (491,778) | (490,525) | ||
| 1,367,644 | (511,368) | |||
| Operating profit before changes in working capital and provisions | 2,222,161 | 1,030,166 | ||
| Increase in trade and other receivables | (207,920) | (93,991) | ||
| Increase in inventories | (399,841) | (831,471) | ||
| Increase in trade and other payables | 272,025 | 329,488 | ||
| (335,736) | (595,974) | |||
| Cash generated from operations | 1,886,425 | 434,192 | ||
| Investing activities | ||||
| Purchases of property, plant, machinery and motor vehicles | (998,617) | (1,010,401) | ||
| Sale of land and buildings, plant, machinery and motor vehicles | 12,538 | 1,190,561 | ||
| Interest received | 27,902 | 8,726 | ||
| (958,177) | 188,886 | |||
| Financing activities | ||||
| Proceeds from long term borrowings | - | 300,000 | ||
| Loan financing repayments | 57,777 | 90,346 | ||
| Repayment of borrowings | (101,917) | (171,020) | ||
| Repayment of hire purchase creditors | (176,432) | (130,335) | ||
| Interest paid | (150,142) | (116,830) | ||
| Dividends paid | (131,040) | (131,040) | ||
| (501,754) | (158,879) | |||
| Increase in cash and cash equivalents | 426,494 | 464,199 | ||
| Cash and cash equivalents, beginning of period | 315,980 | (148,219) | ||
| Cash and cash equivalents, end of period | 742,474 | 315,980 |
| Share Capital | Capital Reserve | Foreign Exchange Reserve | Retained Earnings | Total | Non- Controlling Interests | Total Equity | |
| Balance at 1st January 2015 | 360,000 | 257,319 | 88,241 | 6,730,759 | 7,436,319 | (81,882) | 7,354,437 |
| Comprehensive income | |||||||
| Profit | - | - | - | 1,584,748 | 1,584,748 | (43,214) | 1,541,534 |
| Other comprehensive income | |||||||
| Net pension remeasurement gain recognised directly in equity | - | - | - | 10,000 | 10,000 | - | 10,000 |
| Foreign exchange losses on re-translation of overseas subsidiaries consolidated operations | - | - | (146,822) | - | (146,822) | - | (146,822) |
| Total other comprehensive income | - | - | (146,822) | 10,000 | (136,822) | - | (136,822) |
| Total comprehensive income | - | - | (146,822) | 1,594,748 | 1,447,926 | (43,214) | 1,404,712 |
| Transactions with owners | |||||||
| Dividends | - | - | - | (131,040) | (131,040) | - | (131,040) |
| Total transactions with owners | - | - | - | (131,040) | (131,040) | - | (131,040) |
| Balance at 31st December 2015 | 360,000 | 257,319 | (58,581) | 8,194,467 | 8,753,205 | (125,096) | 8,628,109 |
| Balance at 1st January 2016 | 360,000 | 257,319 | (58,581) | 8,194,467 | 8,753,205 | (125,096) | 8,628,109 |
| Comprehensive income | |||||||
| Profit | - | - | - | 932,101 | 932,101 | (77,584) | 854,517 |
| Other comprehensive income | |||||||
| Net pension remeasurement gain recognised directly in equity | - | - | - | 10,000 | 10,000 | - | 10,000 |
| Foreign exchange gains on re-translation of overseas subsidiaries consolidated operations | - | - | 597,976 | - | 597,976 | - | 597,976 |
| Total other comprehensive income | - | - | 597,976 | 10,000 | 607,976 | - | 607,976 |
| Total comprehensive income | - | - | 597,976 | 942,101 | 1,540,077 | (77,584) | 1,462,493 |
| Transactions with owners | |||||||
| Dividends | - | - | - | (131,040) | (131,040) | - | (131,040) |
| Total transactions with owners | - | - | - | (131,040) | (131,040) | - | (131,040) |
| Balance at 31st December 2016 | 360,000 | 257,319 | 539,395 | 9,005,528 | 10,162,242 | (202,680) | 9,959,562 |
| Dividends paid | 2016 | 2015 |
| Equity shares | ||
| Ordinary shares | ||
| Interim of 6.20p (2015 - 6.20p) per share paid on 12th May 2016 | 29,760 | 29,760 |
| Interim of 2.90p (2015 - 2.90p) per share paid on 21st October 2016 | 13,920 | 13,920 |
| 43,680 | 43,680 | |
| 'A' Ordinary shares | ||
| Interim of 6.20p (2015 - 6.20p) per share paid on 12th May 2016 | 59,520 | 59,520 |
| Interim of 2.90p (2015 - 2.90p) per share paid on 21st October 2016 | 27,840 | 27,840 |
| 87,360 | 87,360 | |
| Total dividends paid | 131,040 | 131,040 |
| Central | Manufacturing | Distribution | Total | |
| 2016 | 2016 | 2016 | 2016 | |
| Revenue | ||||
| External | - | 3,564,987 | 24,850,462 | 28,415,449 |
| Inter company | 472,671 | 2,659,476 | 4,443,233 | 7,575,380 |
| Total | 472,671 | 6,224,463 | 29,293,695 | 35,990,829 |
| Profit | ||||
| EBITDA | (143,881) | 180,991 | 2,158,611 | 2,195,721 |
| Finance costs | (73,959) | (25,867) | (50,316) | (150,142) |
| Finance income | - | 2,489 | 27,413 | 29,902 |
| Depreciation | (279,022) | (140,585) | (381,769) | (801,376) |
| Tax expense | (40,740) | 98,242 | (477,090) | (419,588) |
| Profit/(loss) for the period | (537,602) | 115,270 | 1,276,849 | 854,517 |
| Assets | ||||
| Total assets | 4,497,238 | 1,008,429 | 11,991,240 | 17,496,907 |
| Additions to non current assets | 1,022,501 | - | 347,010 | 1,369,511 |
| Liabilities | ||||
| Total liabilities | 1,022,777 | 2,139,638 | 4,374,930 | 7,537,345 |
| Central | Manufacturing | Distribution | Total | |
| 2015 | 2015 | 2015 | 2015 | |
| Revenue | ||||
| External | - | 3,955,447 | 22,514,637 | 26,470,084 |
| Inter company | 122,593 | 3,267,777 | 4,411,488 | 7,801,858 |
| Total | 122,593 | 7,223,224 | 26,926,125 | 34,271,942 |
| Profit | ||||
| EBITDA | (102,140) | 35,632 | 1,722,532 | 1,656,024 |
| Gain on sale of tangible fixed assets | - | 1,149,629 | 8,511 | 1,158,140 |
| Finance costs | (48,347) | (30,566) | (37,917) | (116,830) |
| Finance income | - | 3,666 | 8,060 | 11,726 |
| Depreciation | - | (432,370) | (326,219) | (758,589) |
| Tax expense | (44,540) | - | (364,397) | (408,937) |
| (Loss)/profit for the period | (195,027) | 725,991 | 1,010,570 | 1,541,534 |
| Assets | ||||
| Total assets | 1,314,918 | 4,588,122 | 10,552,111 | 16,455,151 |
| Additions to non current assets | - | 1,146,385 | 265,722 | 1,412,107 |
| Liabilities | ||||
| Total liabilities | 701,606 | 2,839,750 | 4,285,686 | 7,827,042 |