REG - Braime (T.F.& J.H.) - Final Results <Origin Href="QuoteRef">BMT.L</Origin>

BraimeAnnouncement

15/07/2015 13:53

RNS Number : 8251K
Braime (T.F.& J.H.) (Hldgs) PLC
21 April 2015
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 2014
At a meeting of the directors held today, the accounts for the year ended 31st December 2014 were submitted and approved by the directors. The preliminary accounts statement is as follows:
Chairman's statement
Performance of the group
Group sales revenue in 2014 rose by 5.8% to 24.3 million and operating profit by 14.9% to 1.2 million. Profit for the year ending 2014, after tax, increased by 4.0% from 752,000 to 782,000. 
After a relatively strong result in the first six months of the year, the result for the second half of the year was disappointing. This was caused by the higher than anticipated operating costs in our manufacturing business and by the negative impact of changes in exchange rates, which reduced the contribution of overseas earnings. 
The first interim dividend paid on the 17th October was increased from 2.40p paid in 2013 to 2.90p in 2014, in part reflecting the strong first half performance but principally to restore a better balance between the two dividends paid each year.
In view of the final result for 2014, the directors have approved the payment of the same second interim dividend as last year of 6.20p, making a total dividend, paid in the tax year ending April 2015, of 9.10p, compared to 8.60p in the previous year.
The second interim dividend of 6.20p was paid on 2nd April 2015 to the Ordinary and 'A' Ordinary shareholders on the register as at 27th March 2015.
Group highlights
The group made further substantial investments in machinery to manufacture parts for the external customers of its manufacturing business. It also made several specific investments in machinery to improve the quality, productivity and lead time of components manufactured for our material handling business. Together, these investments largely completed the recent major investment program in our manufacturing business.
During 2005/6 the company made two unsuccessful attempts to sell its main operating site, located in Leeds, at a price sufficient to cover the cost of relocating the business to a modern purpose built facility. Since then we have invested in machinery at our present site to enable us to meet our customers' requirements. The cost of relocating this plant now would be prohibitive and, given the need to supply our customers on a just in time basis, the relocation of our manufacturing is no longer a viable option. Accordingly, in 2013 we began a program of investment to totally modernise our infrastructure and in 2014 we carried out further work as outlined in the group strategic report.
In 2014, we made available a loan of 200,000 to a key supplier in order to help them make a major investment which would strengthen their ability to meet our current and future requirements. The loan was secured, made on a commercial basis, and is re-payable within three years.
During the year the group recruited staff to fill a number of important positions. In our manufacturing business, we have both a new maintenance manager and new quality manager. While in our material handling business, we have recruited three key senior staff in technical and sales roles. All these appointments are already having a very positive impact on our business.
The group continues to invest in new products to ensure that we remain at the forefront of technology and so that we can continue to extend our range of products and provide our customers with innovative solutions. A number of new products, finalised in 2014, are planned for launch in 2015.
Outlook
Group sales revenues for the first quarter of 2015 are above the comparable figure for the same period last year. We hope to have new manufacturing business coming on stream during the year, and, in the material handling sector of our business, we have some exciting new products which we believe will enhance revenue.
A very high proportion of our group sales are made in overseas markets and sold in local currencies, so our result for 2015 will inevitably be affected by movements in exchange rates, in spite of the conscious efforts to match our purchasing and selling currency profiles, in order to mitigate their impact.
Currently the margins on our sales to European markets are being reduced by the fall in the value of the Euro. In contrast, the current strength of the US Dollar is having a positive impact on our margins on products sold in US dollar linked markets. In other areas of the world, we believe that the overall effect of changes in exchange rates will be broadly neutral.
While it is impossible to predict, with any degree of certainty, the overall effect of currency fluctuations, the underlying position of the group remains strong.
University Technical College.
On April 15th 2015, the group exchanged contracts with Leeds Advanced Manufacturing UTC Ltd., (LAM), for the sale of 1.18 acres of land and buildings, (about 25% of the 4.6 acre site) in Hunslet, Leeds for a price of 855,000, plus a contribution of 295,000 towards associated works. The sale remains conditional upon approval by the buyer of the ground conditions and on the securing of planning consent.
This sale will enable the group to eliminate the costs of maintaining and servicing an area surplus to its needs, provide new funds for the modernisation of its facility in Leeds and make improvements in the operating efficiency of the business. 
LAM intends to build a new University Technical College for 600 students, focused on engineering and help them achieve either university entry or placement as apprentices to continue their education while in work. 
Given the longstanding twin problems in the UK of high youth unemployment and a serious shortage of people trained and qualified to work in industry, the company fully supports the UTC program. 
The funds raised by the sale will be used to strengthen the business, which was founded in Leeds in 1888 and whose group headquarters and principal manufacturing site are still based in the city. The group hopes the creation of a UTC within our iconic heritage building will also benefit the wider community of Leeds and, in particular, inspire people to choose a career in engineering.
Employees
Our most important resource is the skill and commitment of our employees and we thank them for their contribution. Recruiting people with the ability and enthusiasm we need to continue the growth of the company, in an ever increasingly competitive world, is our biggest challenge. This applies to all the regions where we have subsidiaries but it is a particularly acute problem in the UK.
Group strategic report 
Principal activities and risks and uncertainties
The group comprises of two core segments; manufacture of deep drawn metal presswork, and the distribution of material handling components and monitoring equipment.
The metal presswork segment operates across several industries including the automotive sector. The market remains challenging due to pricing pressures throughout the supply chain. The TS16949 quality standard is important to the group as it allows us to access growing markets. If lost, this would adversely impact both existing and new business activity. A process of continual improvement in systems, process and review reduce this risk. Long term supply agreements are made with major customers. The company is exposed to medium to long term fluctuations in steel prices. In order to mitigate this volatility, the company fixes its prices with suppliers where possible. 
The material handling components subsidiaries trade from six countries and export to over fifty countries. The division maintains its competitive edge in a price sensitive market through the provision of engineering expertise and by working closely with our suppliers to supply innovative components of the highest standard. In addition, ranges of complementary products are sold into different industries. These monitoring systems are developed and improved on a regular basis.
Exposure to customer credit risk is managed through a variety of methods; credit insurance, credit checking and the setting and monitoring of appropriate credit limits.
The group has a centralised treasury function which, through the use of forward contracts, hedges against foreign exchange differences arising on cash flows in currencies that differ to the operational entity's reporting currency.
The centralised treasury function also controls the group banking facilities, including all lines of funding. Liquidity risk is managed through the matching of short and long term funding to the needs of the business. Medium and long term cash flow projections are prepared and regularly monitored. 
Our business model
The focus of the manufacturing business is to produce quality, technically demanding components. Using automated equipment this allows us to produce in high volumes, yet it also provides flexibility.
The material handling components business is located around the globe allowing us to be close to our core markets. The focus is to provide innovative solutions drawing on our expertise and broad product range.
The two segments are very different serving different markets, however together they add strength and balance to the group.
Performance of Braime Pressings Limited, manufacturer of deep drawn metal presswork
Sales revenues increased but the performance of the company deteriorated due to problems and delays in the installation and commissioning of the new plant purchased in the previous year. As a result, there was a marked drop in the anticipated improvements in productivity. It also delayed the new volumes of work that we had anticipated would come on stream in 2014. 
At the end of 2014, we also took a decision to make a fundamental change to our historic shift pattern, changing our hours worked by our manufacturing business to 6.00am to 2.00pm and 2.00pm to 10.00pm. This gives us much more flexibility to respond to the demands of our major customers, makes it much easier to provide the necessary maintenance and tool room cover and enables us, when necessary, to add a third shift, 10.00pm to 6.00am. The overall result is to substantially increase our production capacity and the volumes of output that we can achieve using the existing machinery.
Since the start of the current year, there has finally been a marked improvement in quality and productivity.
Performance of the 4B division, world wide distributor of components and monitoring systems for the material handling industry
Overall the 4B division increased sales revenues and posted healthy results, although final contribution from the overseas subsidiaries was negatively affected by changes in exchange rates towards the end of 2014.
2015 has begun positively across the group and we are engaged in a number of projects which will contribute positively to the outcome for this year. 
Taxation
The effective rate of tax is 30.5% (2013 - 25.6%). The effective rate is above the standard UK tax rate of 21.5% (2013 - 23.0%) due to the blending of the different rates of tax applied by each of the countries in which the group operates. In any financial year the rate will depend on the mix of profits made between those countries. 
Capital expenditure
In 2014, the group invested 965,000 in plant and equipment, completing our recent substantial investment in new manufacturing machinery. Currently we have minimal commitments for the acquisition of further plant. Our plan for 2015 is to maximise the productivity of our recently acquired equipment.
Included in this plant and equipment figure, is an investment of 135,000 in our manufacturing facility in Leeds on installing new energy efficient LED lighting and in fitting new transformers and switchgear. This provides the manufacturing site with additional power and flexibility to meet current and future needs. Linked to this, and in order to meet the latest safety standards, 552,000 was spent on the electrical rewiring of the site. 
Cash flow
Our debtors increased by 1,045,000 and our stocks also by the relatively small sum of 69,000; both calls on our working capital were balanced by an increase in our creditors of 1,115,000.
The business generated funds from operations of 1,861,000. It invested 1,369,000 in capital expenditure and repaid 443,000 of borrowings.
After the payment of other financial costs and the dividend, the net cash position was negative by 148,000.
Bank facilities
The group's operating banking facilities are renewed annually. The arrangements with HSBC provide sufficient headroom to the group and have allowed us to make the necessary investments in the year.
Balance sheet
Net assets of the group have increased to 7.4 million (2013 - 6.7 million). This increase is due to the strong profit performance in the year. A foreign exchange gain of 11,000 (2013 - loss of 200,000) was recorded on the re-translation of the net assets of the overseas operations. 
Key performance indicators
The group uses certain key performance indicators to assess the performance of the group as a whole and of the individual business. The financial KPIs comprise turnover growth, product and customer margins and operating net profit as demonstrated in note 4 below. Key balance sheet indicators such as inventory levels, inventory aging, stock turnover and debtor days are monitored monthly for both the group and individual entities. The operational KPIs comprise on time delivery achievement, component quality and rejection rates and labour utilisation.
Environment
The group's policy with regard to the environment is that we understand and effectively manage the actual and potential environmental impact of our activities. Our operations are conducted such that we comply with all legal requirements relating to the environment in all areas where we carry out our business. During the period of this report the group has not incurred any fines or penalties or been investigated for any breach of environmental regulations.
Employees
The quality and commitment of our people has played a major role in our business success. This has been demonstrated in many ways, including improvements in customer satisfaction, the development of our product lines and the flexibility they have shown in adapting to changing business requirements. Employee performance is aligned to the achievement of goals set within each subsidiary and is rewarded accordingly. Employees are encouraged to use their skills to best effect and are offered training either externally or internally to achieve this.
Research and Development
The group continues to invest in research and development. This has resulted in improvements in the products which will benefit the group in the medium to long term.
Summarised Consolidated Income Statement for the year ended 31st December 2014 (audited)


2014
2013






Revenue

24,291,700
22,953,805




Changes in inventories of finished goods and work in progress

161,071
311,144
Raw materials and consumables used

(13,535,766)
(12,942,829)
Employee benefits costs

(5,309,357)
(5,021,454)
Depreciation expense

(564,244)
(520,945)
Other expenses

(3,807,604)
(3,704,402)




Profit from operations

1,235,800
1,075,319




Profit on disposal of tangible fixed assets

2,796
32,551
Finance costs

(115,291)
(100,967)
Finance income

2,164
3,330




Profit before tax

1,125,469
1,010,233




Tax expense

(343,340)
(258,167)




Profit for the year

782,129
752,066




Profit attributable to:



Owners of the parent

864,011
752,066
Non-controlling interests

(81,882)
-






782,129
752,066




Basic and diluted earnings per share

54.31p
52.23p
Summarised Consolidated Statement of Comprehensive Income for the year ended 31st December 2014 (audited)


2014
2013






Profit for the year

782,129
752,066




Items that will not be reclassified subsequently to profit or loss


Net remeasurement gain on post employment benefits

44,000
31,000




Items that may be reclassified subsequently to profit or loss


Foreign exchange gains/(losses) on re-translation of overseas operations

10,819
(199,729)




Other comprehensive income for the year

54,819
(168,729)




Total comprehensive income for the year

836,948
583,337




Total comprehensive income attributable to:



Owners of the parent

918,830
583,337
Non-controlling interests

(81,882)
-






836,948
583,337
Summarised Consolidated Balance Sheet at 31st December 2014 (audited)


2014
2014
2013
2013


Assets





Non-current assets





Property, plant and equipment

4,056,506

3,119,378

Goodwill

12,270

12,270

Financial assets

101,853



Total non-current assets


4,170,629

3,131,648






Current assets





Inventories

4,888,183

4,819,200

Trade and other receivables

4,911,108

3,948,734

Financial assets

98,147

-

Cash and cash equivalents

1,357,769

567,226

Total current assets


11,255,207

9,335,160






Total assets


15,425,836

12,466,808












Liabilities





Current liabilities





Bank overdraft

1,505,988

490,944

Trade and other payables

3,752,594

3,146,004

Other financial liabilities

1,323,095

828,414

Corporation tax liability

187,054

43,494

Total current liabilities


6,768,731

4,508,856






Non-current liabilities





Financial liabilities

1,111,045

1,170,923

Deferred income tax liability

191,623

116,000

Total non-current liabilities


1,302,668

1,286,923






Total liabilities


8,071,399

5,795,779






Total net assets


7,354,437

6,671,029






Capital and reserves attributable to equity holders of the parent company







Share capital


360,000

360,000
Capital reserve


257,319

77,319
Foreign exchange reserve


88,241

77,422
Retained earnings


6,730,759

6,156,288
Total equity attributable to the shareholders of the parent


7,436,319

6,671,029
Non-controlling interests


(81,882)

-






Total equity


7,354,437

6,671,029
Summarised Consolidated Cash Flow Statement for the year ended 31st December 2014 (audited)


2014
2014
2013
2013


Operating activities





Net profit


782,129

752,066
Adjustments for:





Depreciation

564,244

520,945

Grants amortised

(1,656)

(1,656)

Non-cash operating charges

-

56,000

Foreign exchange gains/(losses)

15,279

(186,189)

Finance income

(2,164)

(3,330)

Finance expense

115,291

100,967

Gain on sale of land and buildings, plant, machinery and motor vehicles
(2,796)

(32,551)

Adjustment in respect of defined benefits scheme

46,000

34,000

Income tax expense

343,340

258,167




1,077,538

746,353
Operating profit before changes in working capital and provisions


1,859,667
1,498,419






Increase in trade and other receivables

(1,044,846)
(718,157)

Increase in inventories

(68,983)
(431,897)

Increase in trade and other payables

1,114,877
590,038




1,048

(560,016)
Cash generated from operations


1,860,715

938,403






Income taxes paid


(41,685)

(109,535)






Investing activities





Purchases of property, plant, machinery and motor vehicles
(1,368,985)

(2,205,287)

Sale of land and buildings, plant, machinery and motor vehicles
14,540

32,551

Interest received

164

330




(1,354,281)

(2,172,406)
Financing activities





Proceeds from long term borrowings

200,000

1,081,989

Loan financing provided

(200,000)

-

Repayment of borrowings

(272,688)

(141,574)

Repayment of hire purchase creditors
(170,231)

(241,099)

Interest paid

(115,291)

(100,967)

Dividends paid

(131,040)

(112,320)




(689,250)

486,029
Decrease in cash and cash equivalents
(224,501)

(857,509)
Cash and cash equivalents, beginning of period

76,282

933,791
Cash and cash equivalents, end of period

(148,219)

76,282
Consolidated statement of changes in equity for the year ended 31st December 2014 (audited)

Share
Capital
Capital
Reserve
Foreign
Exchange
Reserve
Retained
Earnings
Total
Non-
Controlling
Interests
Total
Equity









Balance at 1st January 2013
360,000
77,319
277,151
5,485,542
6,200,012
-
6,200,012








Comprehensive income







Profit
-
-
-
752,066
752,066
-
752,066








Other comprehensive income







Net remeasurement gain recognised directly in equity
-
-
-
31,000
31,000
-
31,000
Foreign exchange losses on re-translation of overseas operations
-
-
(199,729)
-
(199,729)
-
(199,729)
Total other comprehensive income
-
-
(199,729)
31,000
(168,729)
-
(168,729)








Total comprehensive income
-
-
(199,729)
783,066
583,337
-
583,337








Transactions with owners







Dividends
-
-
-
(112,320)
(112,320)
-
(112,320)
Total transactions with owners
-
-
-
(112,320)
(112,320)
-
(112,320)








Balance at 31st December 2013
360,000
77,319
77,422
6,156,288
6,671,029
-
6,671,029

Share
Capital
Capital
Reserve
Foreign
ExchangeReserve
Retained
Earnings
Total
Non-
Controlling
Interests
Total
Equity









Balance at 1st January 2014
360,000
77,319
77,422
6,156,288
6,671,029
-
6,671,029








Comprehensive income







Profit
-
-
-
864,011
864,011
(81,882)
782,129








Other comprehensive income







Net remeasurement gain recognised directly in equity
-
-
-
44,000
44,000
-
44,000
Foreign exchange losses on re-translation of overseas operations
-
-
10,819
-
10,819
-
10,819
Total other comprehensive income
-
-
10,819
44,000
54,819
-
54,819








Total comprehensive income
-
-
10,819
908,011
918,830
(81,882)
836,948








Transactions with owners







Dividends
-
-
-
(131,040)
(131,040)
-
(131,040)
Cancellation of Preference shares
-
180,000
-
(202,500)
(22,500)
-
(22,500)
Total transactions with owners
-
180,000
-
(333,540)
(153,540)
-
(153,540)








Balance at 31st December 2014
360,000
257,319
88,241
6,730,759
7,436,319
(81,882)
7,354,437
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 per share amounted to 1,440,000 (2013- 1,440,000). There are no potentially dilutive shares in issue.

Dividends paid
2014
2013



Equity shares



Ordinary shares



Interim of 6.20p (2013 - 5.40p) per share paid on 4th April 2014
29,760
25,920

Interim of 2.90p (2013 - 2.40p) per share paid on 17th October 2014
13,920
11,520


43,680
37,440

'A' Ordinary shares



Interim of 6.20p (2013 - 5.40p) per share paid on 4th April 2014
59,520
51,840

Interim of 2.90p (2013 - 2.40p) per share paid on 17th October 2014
27,840
23,040


87,360
74,880

Total dividends paid
131,040
112,320




2.
Cash and cash equivalents
2014
2013



Cash at bank and in hand
1,357,769
567,226

Bank overdrafts
1,505,988
490,944


(148,219)
76,282
3. Major non-cash transaction
During the year the group acquired tangible assets of 148,591 (2013 - nil) under hire purchase agreements. 
4. Segmental information

Central
Manufacturing
Distribution
Total

2014
2014
2014
2014

Revenue




External
-
3,621,626
20,670,074
24,291,700
Inter company
113,568
2,761,536
3,743,664
6,618,768
Total
113,568
6,383,162
24,413,738
30,910,468





Profit




EBITDA
(5,777)
219,116
1,589,501
1,802,840
Finance costs 
(27,820)
(46,387)
(41,084)
(115,291)
Finance income
-
2,000
164
2,164
Depreciation
(6,300)
(287,663)
(270,281)
(564,244)
Tax expense
(78,099)
(34,335)
(230,906)
(343,340)
(Loss)/profit for the period
(117,996)
(147,269)
1,047,394
782,129





Assets




Total assets
1,323,858
4,033,070
10,068,908
15,425,836
Additions to non current assets
-
1,118,171
399,405
1,517,576
Liabilities




Total liabilities
520,316
2,868,453
4,682,630
8,071,399

Central
Manufacturing
Distribution
Total

2013
2013
2013
2013

Revenue




External
-
3,010,216
19,943,589
22,953,805
Inter company
74,866
2,976,179
3,422,562
6,473,607
Total
74,866
5,986,395
23,366,151
29,427,412





Profit




EBITDA
(40,251)
387,263
1,249,252
1,596,264
Gain on sale of land and buildings
-
20,239
12,312
32,551
Finance costs 
(24,848)
(40,703)
(35,416)
(100,967)
Finance income
201
3,000
129
3,330
Depreciation
(3,675)
(343,184)
(174,086)
(520,945)
Tax expense
(15,690)
250,339
(492,816)
(258,167)
Profit/(loss) for the period
(84,263)
276,954
559,375
752,066





Assets




Total assets
1,283,313
2,329,357
8,854,138
12,466,808
Additions to non current assets
1,274,526
441,571
489,190
2,205,287
Liabilities




Total liabilities
395,378
1,541,182
3,859,219
5,795,779
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 2014, 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 5th June 2015. Full details will be included in the published annual report and financial statements, which will be sent to shareholders by the 12th May 2015 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 2014 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 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course.
8. Events after the reporting year
There were no events after the balance sheet date that would require disclosure in accordance with IAS10, "Events after the reporting period", other than those noted in the Chairman's statement.
20th April 2015
For further information please contact:
T.F. & J.H. Braime (Holdings) P.L.C.
M. L. Mills - Financial Director
0113 245 7491
W. H. Ireland Limited
Katy Mitchell LLB
0113 394 6628

This information is provided by RNS
The company news service from the London Stock Exchange
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