Interim Results for six months ended 30 June 2021

Braime

08/09/2021 16:04

RNS Number : 1662L

Braime Group PLC

08 September 2021

 

Braime Group PLC

("Braime" or the "Company" and together with its subsidiaries the "Group")

 

Interim Results for the six months ended 30th June 2021

 

 

The Company presents its unaudited interims results for the six months ended 30 June 2021:

 

Performance

Group sales revenue for the first six months of 2021 increased by 13% to £18.2m when compared to £16.1m for the same period in 2020, while profit before tax increased to £885,000 compared to £372,000 for the same period in 2020.  The retained profit for the six-month period includes a £250,000 provision for repairs commitments to our chain cell operations which has become necessary while the new warehouse is being built.  The directors are pleased to report that following the upheaval of the previous year brought about by the global pandemic, the Group has seen a surge in customer demand which began in the spring of 2021, with all sectors performing strongly, particularly the automotive sector.  The underlying trading performance of the Group should also be viewed from the context of Sterling strengthening during 2021.  A significant proportion of the Group's income is earned in the USA, and consequently, Sterling strengthening against the US dollar (a closing rate of 1:1.389 as at June 2021 compared to 1:1.236 in June 2020) results in a reduction in profit for the Group when reported in Sterling. 

 

Dividends

In line with the Group's policy to maintain dividend growth, balanced alongside the Group's requirement for investment in capital to support long term growth, the directors have decided to increase the interim dividend from 4.00p to 4.25p per share.  This dividend will be paid on 14th October 2021 to the Ordinary and 'A' Ordinary shareholders on the register on the 1st October 2021.  The associated ex-dividend date is 30th September 2021.

 

Braime Pressings Limited

External sales revenue of £2.6m in the first 6 months of 2021 was 35% up on the same period last year driven by strong demand from the automotive sector.  Intercompany sales also increased by £238,000.  The manufacturing division made a profit before tax of £481,000 as a result of the higher demand for its products.  As reported last year, the Company recruited a new sales manager at the beginning of 2020 and after a challenging year the Company is now developing new sectors.

 

4B Division

Our distribution division's external sales revenue of £15.6m increased by 10% when compared to £14.2m for the same period last year.  Intercompany trading increased by 9.8% to £2.6m (£2.4m for the same period in 2020). The division has benefitted from an exceptional order of chain products from the Middle East early in the year.  The £1.4m increase in external sales has had a positive direct impact on profitability, with profit after tax for the 4B division for the six-month period increasing to £494,000 as compared to £307,000 for the same period last year.

 

Balance Sheet

Total net assets as at 30th June 2021 amounted to £15.4m (30th June 2020 - £14.9m).  Capital asset additions of £991,000 during the period relate to a large extent to the remainder of the €2.2m construction costs of the warehouse being £433,000 for 4B France which was fully completed in May 2021 as announced earlier in the year.   As announced last month, the Company has also commenced construction of a new climate-controlled warehouse and additional parking facilities at our head office facility in Leeds, UK which is anticipated to cost £1m and is being funded primarily from a £850,000 development loan from the Company's bankers.  At the half-year, the Group had spent £185,000 on improvements to its head office facilities.  Other investments relate to various items of manufacturing equipment and other IT capital expenditure.  

 

Inventory has decreased by £44,000 when compared to 30th June 2020 and increased by £219,000 when compared to 31st December 2020.  Trade receivables of £7.5m have increased by £918,000 when compared to 30th June 2020 and increased by £1,518,000 when compared to 31st December 2020.  The increase in trade debtors are a direct result of the increase in revenue in the first six months of 2021 and is in line with seasonal trend.  Overall debtor days are similar to prior periods. The increase in long-term borrowings during the year are in line with expectations, being the take up of new loans of £532,000 in relation to the final draw-down of the €1.7m loan facility in 4B France with Credit du Nord and BPI-France which, as mentioned in the 2019 annual report, was obtained to fund the warehouse construction (the balance having been funded out of profit).

 

Cash flow

Cash at the end of the period was £764,000.  Cash generated from operations before working capital movements was £1.3m during the period.  An increase in trade receivables of £1,518,000, an increase in inventories of £219,000 offset by an increase in trade payables of £1,138,000 saw working capital reduce by £599,000 since the year end.  These are a consequence of the increased level of trading activity during the period.  Investment in capital projects mentioned above gave rise to capital outflows of £991,000 and the Group repaid £234,000 of loans whilst the take up of new loans of £532,000 in France mentioned above, provided proceeds from borrowings.  Overall, net cash reduced by £433,000 during the six months to 30th June 2021.   The business has sufficient headroom within its £3.5m bank overdraft facility and management remains focused in ensuring that working capital requirements, particularly for stock, are carefully monitored and controlled. 

 

Principal exchange rates

The Group reports its results in Sterling, its presentational currency.  The Group operates in six other currencies and the average of the principal exchange rates in use during the half year and as at 30th June 2021 are shown in the table below, along with comparatives.  Since a significant proportion of the Group revenues are in the USA, the Group has incurred foreign exchange losses from the strengthening of Sterling against the US dollar since 31st December 2020.  

 

Currency
Symbol
Avg rate
HY 2021
Avg rate
HY 2020
Avg rate
FY 2020
Closing rate
30th Jun 2021
Closing rate
30th Jun 2020
Closing rate
31st Dec 2020
Australian Dollar
AUD
1.813
1.922
1.867
1.840
1.795
1.763
Chinese Renminbi (Yuan)
CNY
8.993
8.857
8.880
8.941
8.714
8.890
Euro
EUR
1.156
1.140
1.126
1.165
1.100
1.112
South African Rand
ZAR
20.257
21.334
21.309
19.711
21.468
20.030
Thai Baht
THB
43.064
39.993
40.404
44.290
38.152
40.838
United States Dollar
USD
1.389
1.259
1.290
1.382
1.236
1.365

 

Key performance indicators

The Group uses the following key performance indicators to assess the performance of the Group as a whole and of the individual businesses:

 

Key performance indicator
Note
Half year
2021
Half year
2020
Full year
2020
Turnover growth
1
13.0%
(5.6%)
(1.9%)
Gross margin
2
47.2%
47.4%
46.7%
Operating profit
3
£0.98m
£0.45m
£1.38m
Stock days
4
170 days
191 days
182 days
Debtor days
5
59 days
63 days
56 days

 

Notes to KPI's

1.             Turnover growth

The Group aims to increase shareholder value by measuring the year on year growth in Group revenue.  Revenues are up due to the strong demand in the manufacturing sector and improvements in the global economic climate as the impact of the COVID pandemic recedes.

 

2.             Gross margin

Gross profit (revenue less change in inventories and raw materials used) as a percentage of revenue is monitored to maximise profits available for reinvestment and distribution to shareholders.  Gross margin has decreased slightly over the same period last year but has improved when compared to the full year results in 2020.  The directors continue to monitor the margins carefully for further movement.

 

3.             Operating profit

Sustainable growth in operating profit is a strategic priority to enable ongoing investment and increase shareholder value.  Operating profits have improved as a direct result of the increase in sales in both the manufacturing and the 4B division.

 

4.             Stock days

The average value of inventories divided by raw materials and consumables used and changes in inventories of finished goods and work in progress expressed as a number of days is monitored to ensure the right level of stocks are held in order to meet customer demands whilst not carrying excessive amounts which impacts upon working capital requirements.  Stock days have reduced with sales increasing but inventories remaining largely unchanged.

 

5.             Debtor days

The average value of trade receivables divided by revenue expressed as a number of days.  This is an important indicator of working capital requirements.  Debtor days at 59 days are slightly below the standard payment terms of 60 days.  Management remain focused on reducing this to improve cash.

 

Other metrics monitored weekly or monthly include quality measures (such as customer complaints), raw materials buying prices, capital expenditure, line utilisation, reportable accidents and near-misses.

 

Ongoing impact of the COVID pandemic

Due to the support of our staff, the business succeeded in operating throughout the pandemic, with only limited numbers working from home, where possible.  With the exception of our staff at 4B Asia Pacific, "normal work" patterns have returned across the group, while we continue to act cautiously to try to minimise the effects of the ongoing epidemic. Nevertheless, our sales activities continue to be negatively affected by the remaining travel restrictions and the lack of trade exhibitions, both of which greatly limit our ability to engage with our customers.

 

While we have adopted new means of marketing during the pandemic, these do not replace the benefits of direct contact with our customers. This direct contact has always been central to our process of continuously developing new product and of bringing these products to market. We hope that our ability to visit our customers and display our products at trade exhibitions will gradually become possible in the coming months.

 

Short term Impact of Brexit

The group is heavily dependent on the import of raw materials to manufacture our products, and on the import of finished product, both of which are then exported globally, and a large proportion of group sales are made in sales to overseas markets.  Our trained and experienced staff were able to make and automate the relatively simple changes to our existing documentation required to continue our exports to the EU. Where we were able to deliver in full truck loads, our exports to the EU continued almost seamlessly.

 

However, where we had to ship part loads on trucks, shared with UK exporters who were less familiar with export documentation, our own deliveries were significantly delayed by incorrect or incomplete documentation provided by other exporters. We were also taken by surprise by the lack of knowledge within many European freight companies. No doubt this lack of preparedness was caused by the months, and indeed years, of uncertainty and political brinkmanship and by the last-minute nature of the Trade Agreement.  We have now largely adapted to this situation by re-scheduling our exports and delivering on dedicated trucks wherever possible, and by switching to more competent international freight companies. 

 

Outlook for the second half of 2021

We are benefitting from a large increase in the volume of sales, due in part to the Brexit Bounce, and, in part, due to the ongoing introduction of new products.  The benefits of this increase in the volume of sales are tempered by the quite unprecedented rise in the cost of many key raw materials, including steel and plastic resin, which have both increased by around 35% and also by an equally unprecedented jump in the cost of freight, particularly sea freight, which affects both import and export. In some case, the cost of freight is 700% higher than 12 months ago.

 

Both inflationary problems will reduce our margins in the short term. We are trying to pass on increases to our customers, but there is an inevitable delay in this process. Meanwhile these price increases will almost certainly lead eventually to a drop in the volume of sales.  The huge increase in the cost of delivering goods over long distances, creates major challenges for our export focused group - but also creates potential new opportunities, for our manufacturing business.

 

 

For further information please contact:

 

Nicholas Braime/Cielo Cartwright

0113 245 7491

 

W. H. Ireland Limited

Katy Mitchell

0113 394 6628

 

 

Braime Group PLC
Consolidated income statement for the six months
ended 30th June 2021
Note
Unaudited 
 6 months to
30th June 
 2021
Unaudited 
 6 months to
30th June 
 2020
Audited
year to
31st December
2020
£'000
£'000
£'000
Revenue
18,212
16,114
32,803
Changes in inventories of finished goods and work in progress
51
492
(63)
Raw materials and consumables used
(9,661)
(8,954)
(17,428)
Employee benefits costs
(4,366)
(4,406)
(8,408)
Depreciation expense
(655)
(646)
(1,280)
Other expenses
(2,597)
(2,146)
(4,277)
Other operating income
5
-
30
Profit from operations
989
454
1,377
Finance costs
(106)
(82)
(191)
Finance income
2
-
9
Profit before tax
885
372
1,195
Tax expense
(220)
(114)
(341)
Profit for the period
665
258
854
Profit attributable to:
Owners of the parent
608
242
823
Non-controlling interests
57
16
31
665
258
854
Basic and diluted earnings per share
2
46.18p
16.81p
59.31p

 

 

Braime Group PLC
Consolidated statement of comprehensive income for the six months
ended 30th June 2021
Unaudited
6 months to
30th June
2021
Unaudited
6 months to
30th June
2020
Audited
year to
31st December
2020
£'000
£'000
£'000
Profit for the period
665
258
854
Items that will not be reclassified subsequently to profit or loss
Net pension remeasurement gain on post-employment benefits
-
-
66
Items that may be reclassified subsequently to profit or loss
Foreign exchange (losses)/gains on re-translation of overseas operations
(97)
404
(133)
Other comprehensive income for the period
(97)
404
(67)
Total comprehensive income for the period
568
662
787
Total comprehensive income attributable to:
Owners of the parent
489
656
744
Non-controlling interests
79
6
43
568
662
787

 

The foreign currency movements arise on the re-translation of overseas subsidiaries' opening balance sheets at closing rates.

 

Braime Group PLC
Consolidated balance sheet at 30th June 2021
Unaudited
6 months to
30th June
2021
Unaudited
6 months to
30th June
2020
Audited
year to 31st
December
2020
£'000
£'000
£'000
Non-current assets
Property, plant and equipment
8,216
7,246
7,830
Intangible assets
31
44
37
Right of use assets
683
190
487
Total non-current assets
8,930
7,480
8,354
Current assets
Inventories
9,083
9,127
8,864
Trade and other receivables
7,472
6,554
5,855
Cash and cash equivalents
1,673
1,558
1,533
Total current assets
18,228
17,239
16,252
Total assets
27,158
24,719
24,606
Current liabilities
Bank overdraft
909
736
335
Trade and other payables
5,344
4,586
4,744
Other financial liabilities
2,661
2,042
2,133
Corporation tax liability
70
47
78
Total current liabilities
8,984
7,411
7,290
Non-current liabilities
Financial liabilities
2,479
2,031
2,075
Deferred income tax liability
276
382
278
Total non-current liabilities
2,755
2,413
2,353
Total liabilities
11,739
9,824
9,643
Total net assets
15,419
14,895
14,963
Capital and reserves
Share capital
360
360
360
Capital reserve
257
257
257
Foreign exchange reserve
(270)
408
(151)
Retained earnings
15,296
14,211
14,800
Total equity attributable to the shareholders of the parent company
15,643
15,236
15,266
Non-controlling interests
(224)
(341)
(303)
Total equity
15,419
14,895
14,963

 

 

Braime Group PLC
Consolidated cash flow statement for the six months
ended 30th June 2021
Note
Unaudited
6 months to
30th June
2021
Unaudited
6 months to
30th June
2020
Audited
year to
31st December
2020
£'000
£'000
£'000
Operating activities
Net profit
665
258
854
Adjustments for:
Depreciation
655
646
1,280
Foreign exchange (losses)/gains
(4)
299
(170)
Finance income
(2)
-
(9)
Finance expense
106
82
191
(Gain)/loss on sale of plant, machinery and motor vehicles
(5)
-
1
Adjustment in respect of defined benefit scheme
-
-
71
Income tax expense
220
114
341
Income taxes paid
(329)
(8)
(168)
Operating profit before changes in working capital and provisions
1,306
1,391
2,391
Increase in trade and other receivables
(1,518)
(915)
(356)
Increase in inventories
(219)
(554)
(291)
Increase in trade and other payables
1,138
787
942
(599)
(682)
295
Cash generated from operations
707
709
2,686
Investing activities
Purchases of property, plant, machinery and motor vehicles
(991)
(855)
(2,057)
Sale of plant, machinery and motor vehicles
5
8
13
Interest received
2
-
4
(984)
(847)
(2,040)
Financing activities
Proceeds from long term borrowings
532
900
1,117
Repayment of borrowings
(234)
(116)
(419)
Repayment of hire purchase creditors
(109)
(118)
(217)
Repayment of lease liabilities
(127)
(172)
(228)
Bank interest paid
(55)
(63)
(124)
Lease interest paid
(37)
(12)
(38)
Hire purchase interest paid
(15)
(7)
(29)
Dividends paid
(112)
(115)
(173)
(157)
297
(111)
(Decrease)/increase in cash and cash equivalents
(434)
159
535
Cash and cash equivalents, beginning of period
1,198
663
663
Cash and cash equivalents (including overdrafts), end of period
3
764
822
1,198

 

 

Braime Group PLC
Consolidated statement of
changes in equity for the
six months ended
30th June 2021
Share
Capital
Capital
Reserve
Foreign
Exchange
Reserve
Retained
Earnings
Total
Minority
Interests
Total
Equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31st December
2020
360
257
(151)
14,800
15,266
(303)
14,963
Comprehensive income
Profit
-
-
-
608
608
57
665
Other comprehensive income
Foreign exchange (loss)/gain
on re-translation of overseas operations
-
-
(119)
-
(119)
22
(97)
Total other comprehensive
income
-
-
(119)
-
(119)
22
(97)
Total comprehensive
income
-
-
(119)
608
489
79
568
Transactions with owners
Dividends
-
-
-
(112)
(112)
-
(112)
Total transactions with owners
-
-
-
(112)
(112)
-
(112)
Balance at 30th June 2021
360
257
(270)
15,296
15,643
(224)
15,419


 

 

Braime Group PLC
Consolidated statement of
changes in equity for the
six months ended
30th June 2020
Share
Capital
Capital
Reserve
Foreign
Exchange
Reserve
Retained
Earnings
Total
Minority
Interests
Total
Equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31st December 2019
360
257
(6)
14,084
14,695
(346)
14,349
Comprehensive income
Profit
-
-
-
242
242
16
258
Other comprehensive income
Foreign exchange gain/(loss) on re-translation of overseas
operations
-
-
414
-
414
(11)
403
Total other comprehensive
income
-
-
414
-
414
(11)
403
Total comprehensive
income
-
-
414
242
656
5
661
Transactions with owners
Dividends
-
-
-
(115)
(115)
-
(115)
Total transactions with owners
-
-
-
(115)
(115)
-
(115)
Balance at 30th June 2020
360
257
408
14,211
15,236
(341)
14,895


 

Braime Group PLC
Consolidated statement of
changes in equity for the
year ended 31st December
2020
Share
Capital
Capital
Reserve
Foreign
Exchange
Reserve
Retained
Earnings
Total
Minority
Interests
Total
Equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 1st January 2020
360
257
(6)
14,084
14,695
(346)
14,349
Comprehensive income
Profit
-
-
-
823
823
31
854
Other comprehensive income
Net pension remeasurement
gain recognised directly in
equity
-
-
-
66
66
-
66
Foreign exchange losses on
re-translation of overseas
operations
-
-
(145)
-
(145)
12
(133)
Total other comprehensive
income
-
-
(145)
66
(79)
12
(67)
Total comprehensive
income
-
-
(145)
889
744
43
787
Transactions with owners
Dividends
-
-
-
(173)
(173)
-
(173)
Total transactions with owners
-
-
-
(173)
(173)
-
(173)
Balance at 31st December
2020
360
257
(151)
14,800
15,266
(303)
14,963


1.      Accounting policies

Basis of preparation

The interim financial report has been prepared using accounting policies that are consistent with those used in the preparation of the full financial statements to 31st December 2020 and those which management expects to apply in the Group's full financial statements to 31st December 2021.

 

This interim financial report is unaudited.  The comparative financial information set out in this interim financial report does not constitute the Group's statutory accounts for the period ended 31st December 2020 but is derived from the accounts.  Statutory accounts for the period ended 31st December 2020 have been delivered to the Registrar of Companies.  The auditors have reported on those accounts.  Their audit report was unqualified and did not contain any statements under Section 498 of the Companies Act 2006.

 

The Group's condensed interim financial information has been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted for the use in the European Union and in accordance with IAS 34 'Interim Financial Reporting' and the accounting policies included in the Annual Report for the year ended 31st December 2020, which have been applied consistently throughout the current and preceding periods.  The Group has adopted the following new or amended standards as of 1st January 2021 -

 

·           Amendments to IFRS9, IAS39, IFRS7, IFRS4 and IFRS16 - Interest rate benchmarks - introduces practical expedient and exemptions from hedge accounting requirements - effective accounting periods beginning on or after 1 January 2021

 

The application and interpretations surrounding the new or amended standards is not expected to have a material impact on the Group's reported financial performance or position.  However, they may give rise to additional disclosures being made in the financial statements.

 

2.      Earnings per share and dividends

        Both the basic and diluted earnings per share have been calculated using the net results attributable to shareholders of Braime Group PLC as the numerator.

 

        The weighted average number of outstanding shares used for basic earnings per share amounted to 1,440,000 (2020 - 1,440,000).  There are no potentially dilutive shares in issue.

 

6 months to
30th June
2021
£'000
Dividends paid on equity shares
Ordinary shares
Interim of 7.80p per share paid on 25th May 2021
37
'A' Ordinary shares
Interim of 7.80p per share paid on 25th May 2021
75
Total dividends paid
112
Year to
31st December
2020
£'000
Dividends paid on equity shares
Ordinary shares
Interim of 8.00p per share paid on 5th June 2020
38
Interim of 4.00p per share paid on 16th October 2020
19
57
'A' Ordinary shares
Interim of 8.00p per share paid on 5th June 2020
77
Interim of 4.00p per share paid on 16th October 2020
39
116
Total dividends paid
173

 

3.      Cash and cash equivalents

Unaudited
6 months to
30th June
2021
Unaudited
6 months to
30th June
2020
Audited
year to
31st December
2020
£'000
£'000
£'000
Cash at bank and in hand
1,673
1,558
1,533
Bank overdrafts
(909)
(736)
(335)
764
822
1,198

 

4.      Segmental information

Unaudited 6 months to
30th June 2021
Central
Manufacturing
Distribution
Total
£'000
£'000
£'000
£'000
Revenue
External
-
2,642
15,570
18,212
Inter company
1,006
1,933
2,615
5,554
Total
1,006
4,575
18,185
23,766
Profit
EBITDA
36
517
1,091
1,644
Finance costs
(34)
(17)
(55)
(106)
Finance income
-
-
2
2
Depreciation
(296)
(19)
(340)
(655)
Tax expense
(16)
-
(204)
(220)
(Loss)/profit for the period
(310)
481
494
665
Assets
Total assets
5,512
5,895
15,751
27,158
Additions to non-current assets
379
11
942
1,332
Liabilities
Total liabilities
888
3,141
7,710
11,739

 

Unaudited 6 months to
30th June 2020
Central
Manufacturing
Distribution
Total
£'000
£'000
£'000
£'000
Revenue
External
-
1,953
14,161
16,114
Inter company
1,016
1,695
2,381
5,092
Total
1,016
3,648
16,542
21,206
Profit
EBITDA
352
(18)
767
1,101
Finance costs
(53)
(15)
(14)
(82)
Finance income
-
-
-
-
Depreciation
(300)
(11)
(335)
(646)
Tax expense
(14)
10
(111)
(115)
(Loss)/profit for the period
(15)
(34)
307
258
Assets
Total assets
5,449
4,551
14,719
24,719
Additions to non-current assets
242
2
634
878
Liabilities
Total liabilities
926
2,384
6,514
9,824

 

Audited year to
31st December 2020
Central
Manufacturing
Distribution
Total
£'000
£'000
£'000
£'000
Revenue
External
-
3,762
29,041
32,803
Inter company
1,772
3,068
5,159
9,999
Total
1,772
6,830
34,200
42,802
Profit
EBITDA
309
(163)
2,511
2,657
Finance costs
(105)
(31)
(55)
(191)
Finance income
-
7
2
9
Depreciation
(592)
(28)
(660)
(1,280)
Tax expense
32
-
(373)
(341)
(Loss)/profit for the period
(356)
(215)
1,425
854
Assets
Total assets
5,178
4,200
15,228
24,606
Additions to non-current assets
415
54
2,020
2,489
Liabilities
Total liabilities
801
2,025
6,817
9,643

 

 

 

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