REG - Braime Group PLC - Annual Results for the Year Ended 31 December 2021
28/04/2022 07:00
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RNS Number : 6069J Braime Group PLC 28 April 2022
BRAIME GROUP PLC
("Braime" or the "Company" and with its subsidiaries the "Group")
ANNUAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2021
At a meeting of the directors held today, the accounts for the year ended 31st
December 2021 were submitted and approved by the directors. The accounts
statement is as follows:
Chairman's statement
Overview
We expected 2021 to be challenging. Instead, all our subsidiaries across the
Group exceeded both their budget and their prior year's sales. In particular,
the revenues of Braime Pressings increased substantially due to exceptionally
high demand from its external customers for commercial vehicle components, as
well as increased demand from its internal customers in the Group for the
supply of material handling components to the 4B division, due to a surprising
increase in infrastructure projects globally. The combined effect was to lift
the annual revenue of Braime Pressings by 38%. In consequence, the
manufacturing business made a very significant contribution to the Group
operating profit for the first time in recent years.
Across the Group in 2021, Sales increased from £32.8m in 2020 to £36.4m in
2021, and the overall gross margin rose from 46.7% to 48.4%. Meanwhile the
effect of exchange rate movements on overseas margins and earnings was
marginally positive in 2021. So the Group operating profit increased from
£1.4m to £2.5m before exceptional costs, an excellent result in the context
of the pandemic.
However, the results include £1.2m of exceptional costs, £1.0m of which the
Directors have set aside as a provision to cover the costs of re-building part
of the UK facility, which had to be demolished in December. This issue is
discussed further later in the Statement. After deducting both the finance
expense of £0.2m and the exceptional cost of £1.2m the profit before tax, is
£1.1m, similar to the figure in 2020.
Dividends
The company paid an interim dividend of 4.25p in October 2021. Based on the
positive result for 2021, and strong current trading, the directors propose
paying a second dividend of 8.20p on the 8th June to the holders of the
Ordinary and "A" Ordinary Shares on the Share Register on the 20th May 2022.
(The ex-dividend date is the 19th May 2022). This brings the total dividend
paid in relation to 2021 to12.45p, compared to 11.8p in 2020.
Strategy
The business has continued to pursue its longstanding Strategy of aiming to
achieve growth in sales and profit by consistently investing in 3 key areas:-
- new machinery and equipment to achieve ongoing improvements in productivity
and efficiency;
- product development to add further innovative products for existing and new
customers;
- developing new markets which offer opportunities to expand the customer
base.
This strategy is pursued through a policy of maintaining low central
overheads, and by limiting central control to the areas of finance, capital
expenditure, product development and marketing support. Control over other
areas of the business is delegated to the subsidiaries, who are best placed to
develop policies to suit their own local markets.
Capital Investment
In 2021 the Group made capital investments totalling £2.1m, repeating the
level of investment made in 2020. Of this, £0.7m was invested in production
equipment, £0.5m in the completion of the new operating and distribution
facility for 4B France, and £0.7m spent towards the cost of the new warehouse
being constructed for our UK manufacturing facility.
The new premises at 4B France, completed in May 2021, provide larger and more
modern office and storage facilities, significantly improve the ability to
serve existing customers, support future growth, and enable it to provide
support, where necessary post Brexit, to other European customers still
supplied primarily from the UK.
The new climate controlled warehouse in Leeds will provide Braime Pressings
with additional centralised climate-controlled storage for both raw materials
and finished parts. The new warehouse, dispatch area, and extra employee
parking were scheduled for completion in October 2021 but have been seriously
delayed by the issue in the Chain Cell and the unexpected discovery of a 30m
deep water well at a point where the new building joins the existing facility,
as announced in February 2022.
The well, not marked on any current or historical maps, and missed by the
ground survey and exploratory bore holes, was probably part of Union Foundry,
built around 1850, occupying part of the current manufacturing site prior to
its acquisition by T.F. & J.H. Braime in 1910. The cost of plugging and
securing the well beneath the foundations, and the resulting delay to the
building program, have added around £300,000 to the cost of this project.
Completion is finally expected in the summer of this year.
New Product Development
In 2021, we brought to market a number of new innovative products and
continued our investment in product development. The long process from
original concept, through the assessment of the technical and commercial
feasibility of the idea, detailed design, gaining the relevant approvals
standard and certification, carrying out field trials, to final product
launch, takes a minimum of 3 years and sometimes much more. Devoting current
time to continuously progressing a stream of new product development is
crucial to the future of the business.
Repairs to the UK Facility
In July 2021, following a major storm, bricks under a beam supporting the roof
of the North-East corner of the Leeds facility, fell to ground in the Chain
Cell. Very fortunately nobody was hurt, but the drop of a structural beam by
300mm, caused another supporting beam to rotate off its location in the
opposite "Chimney Wall" and pushed out the top of an external wall running
adjacent to Sayner Lane, forcing the wall to bow outwards and the public
highway had to be closed.
Our structural engineers advised that the building would inevitably
deteriorate further, cause the roof to collapse and, when it did so, would
pull down further areas of roofing over the main workshops and that the only
option was full demolition. We reserved £250,000 for this at the interim
results stage.
The Leeds facility is a Grade II Listed Building. Under the 1990 Listed
Buildings Act, it is a criminal offence to demolish or materially alter a
Listed Building without the prior consent of the local authority, in our case
Leeds City Council (LCC). Prior to granting their consent for demolition, LCC
required that our structural engineers justified the demolition and that our
architects submitted a planning application for the demolition and the
restoration of the building, which included important features of the historic
structure deemed of particular value. These features included rebuilding the
original facade of the building adjacent to Sayner Lane re-using the original
bricks and restoring the original fireplace and chimney, which dominated the
rear of the property and formed an important part of the Union Foundry, built
in the mid-19th Century, during the early industrial revolution in Leeds.
Following an application for demolition and re-building, the Planning
Application was granted in mid-January 2022. The current best estimate from
specialist advisors is that the total cost will be in the region of £850,000
which will have to be financed from internal resources. However, we are
still in discussion with LCC planners, architects, and potential contractors
to minimise the cost of the re-construction, including the costly features
required by the council but creating a new low maintenance building designed
to increase efficiency, reduce operational costs and provide additional usable
space for storage and production. We hope to receive firm pricing in early
May and complete the works in 2022. Further updates will be provided.
This unexpected event forced Braime Pressings to temporarily relocate and
condense some of its manufacturing operation in another part of the UK
facility, causing additional stress at a time when resources were already
fully stretched. The only mitigating factors are that it involved the
oldest part of the facility, dating from 1850, was in poor condition, badly
designed, and built on clay without foundations. Despite these setbacks, the
overall results to date have remained positive.
Risk
Business risks are set out in the strategic report but the two principal risks
to the Group are its exposure to currency fluctuations, and its exposure to
claims for compensation linked to product failure. These primary risks are due
respectively, to the very high proportion of the Group products which are sold
overseas, and to the specific nature of the markets in which it is engaged.
The Group also buys part of its raw materials in overseas currencies, and this
partly offsets the fact that around 80% of Group revenues are made in overseas
markets and currencies. The business holds substantial funds in key foreign
currencies and, to the limited extent to which this is possible, it minimises
the risk by reacting to currency fluctuations. This involves both judgement
and luck and the risk, inherent in the Groups profile, remains unavoidable in
the long-term.
A large proportion of the Group's products are sold into the material handling
market, primarily to storage and processing facilities. In the case of the
mechanical components, the parts are used in physically transporting the
granular product; in the case of the electronic components, they are designed
to help reduce the risk that the combination of the dust and oxygen present in
moving high volumes of combustible product, triggers a fire or dust explosion.
As a result, the business is exposed periodically to claims for financial
compensation although no such claims have been made in the financial year.
Great care is taken in the design and manufacture of our products in order to
meet and maintain a multitude of complex international Standards and
Approvals. This process involves significant ongoing cost. Nevertheless, the
risk cannot be entirely eliminated so the Group carries insurance to enable it
to defend itself against any claims that may arise.
New Business Opportunity
In April 2022, the Group purchased the exclusive sales rights, and customer
list, for an additional range of electrical components used in the bulk
material handling industry. This product range will be re-labelled and
integrated with our own "4B" brand and the purchase increases our current
small UK market, expands our customer base and creates potential for further
growth.
Staff
In my 2020 Report, we praised our staff for their courage in working through
the pandemic and their willingness to change their patterns of work to meet
the much higher demand from our customers and compensate for those employees
who became ill or who needed to be furloughed. The large degree of flexibility
shown by our staff in coping with the additional problems outlined above has
continued through 2021.
Just as everyone thought the pandemic was finally over and normality was
slowly returning, the workload of many of our staff has been massively
increased by further new challenges. As always, the continued success of the
business depends almost entirely on the efforts and enthusiasm of our staff at
all levels of the business.
Current Trading and Outlook
The first quarter of 2022 has begun very positively. Sales across the Group
are currently running well ahead of the same period in 2021, as customers
continue to enjoy a post pandemic bounce.
Group sales are diversified by product and industry and are sold in a wide
spread of overseas markets, some of which will be less affected by any
recession. In some cases, these markets will actually benefit from the steep
rise in grain and other commodity prices. Currently though, the immediate
future is uncertain and a major recession in the UK, and Europe is widely
anticipated.
The invasion of Ukraine by Russia has tragic and unimaginable humanitarian
consequences. It has also largely closed, for the moment, two very significant
markets for agro-industrial components supplied both directly, and especially
indirectly, by Group subsidiaries.
The Group is being badly affected by huge increases in the cost of our main
raw materials, steel, plastic resin and rubber. In 2022, these increases
have already averaged 50% and are unprecedented in peacetime. Meanwhile, the
over 600% increase in the cost of sea freight, and the doubling of delivery
times during 2021 has shown no sign of abating. On occasions, the shipping
cost now exceeds the ex-works cost of the products. The size of the increases,
and the long and unreliable delivery times, are very disruptive for a Group
dependent on trading globally.
These problems seriously affect purchasing, production and sales and create a
huge increase in the stress and the daily work of our employees. Above all,
the knock-on effect of this instability puts every order and every customer
perpetually "at risk". We therefore look to the year ahead with concern, and
anticipate difficult times ahead, although historically, the diversity of our
product range and the global nature of our sales have together helped us
weather such challenges.
Nicholas Braime, Chairman
27th April 2022
For further information please contact:
Braime Group PLC
Nicholas Braime/Cielo Cartwright
0113 245 7491
W. H. Ireland Limited
Katy Mitchell
0113 394 6628
The directors present their strategic report of the Company and the Group for
the year ended 31st December 2021.
Principal activities
The principal activities of the Group during the year under review was the
manufacture of deep drawn metal presswork and the distribution of material
handling components and monitoring equipment. Manufacturing activity is
delivered through the Group's subsidiary Braime Pressings Limited and the
distribution activity through the Group's 4B division.
Braime Pressings specialises in metal presswork, including deep drawing,
multi-stage progression and transfer presswork. Founded in 1888, the
business has over 130 years of manufacturing experience. The metal presswork
segment operates across several industries including the automotive sector and
supplies external as well as group customers.
The subsidiaries within the 4B division are industry leaders in developing
high quality, innovative and dependable material handling components for the
agricultural and industrial sectors. They provide a range of complementary
products including elevator buckets, elevator and conveyor belting, elevator
bolts and belt fasteners, forged chain, level monitors and sensors and
controllers for monitoring and providing preventative maintenance systems
which facilitate handling and minimise the risk of explosion in hazardous
areas. The 4B division has operations in the Americas, Europe, Asia,
Australia and Africa and in 2021 traded in ninety countries. The US
subsidiary also has an injection-molding plant. All injection-molded
products are made wholly for internal consumption and this is classed as 4B
division activity rather than included in the manufacturing segment.
Performance highlights
The board is pleased to report a significant improvement in the underlying
results of the Group. For the year ended 31st December 2021, the Group
generated revenues of £36.4m, up £3.6m from prior year. Profit from
operations before exceptional costs was £2.5m, up £1.1m from prior year and
EBITDA before exceptional costs was £3.8m up £1.2m from prior year. As
mentioned in the Chairman's Statement, exceptional costs of £1.2m relate to
extensive repairs to the chain cell area of our Hunslet Road property,
following the discovery of a series of structural faults along three walls.
As at the year end, we had spent £0.2m demolishing the wall, dismantling a
large area of roofing and securing the surrounding area.
However, because the property is Grade II listed, the external walls will
require careful restoration of original features using materials agreed with
the local authority conservation officers. At the time of writing, we have
provided for additional costs of £0.85m being our best estimate of the
required cost of restoration. The chain cell repair has also contributed to
£0.2m of delays to the completion of our warehouse which is not now expected
to be completed until the summer and this is also included in our
provision. Profit before tax is £1.1m including exceptional costs is in
line with prior year (2020 - £1.2m).
At 31st December 2021, the Group had net assets of £15.7m.
Cash flow
Inventories increased by £1.3m as the Group planned for increased demand
partly as a result of the easing of Covid-19 restrictions on world economies,
and partly to reduce the impact of anticipated inflation on raw materials.
Trade and other receivables increased by £0.3m reflecting increased customer
activity close to the year end for the same reason. These were largely
offset by an increase in our trade and other payables of £0.2m and an
increase in provisions of £1.1m. In total the business generated funds from
operations of £1.9m (2020 - £2.7m). The Group continued its investment
programme during the year, spending £2.1m on capital items; £0.7m of this
was on the construction of the new warehouse in the UK announced in the summer
of 2021 and a further £0.5m to complete the new warehouse in France which was
officially opened in May 2021. After the payment of other financial costs
and the dividend, the cash balance (net of overdraft) was £1.0m, a decrease
of £0.2m from the prior year.
Bank facilities
The Group's operating banking facilities are renewed annually. As announced
last year, the new UK warehouse construction is being funded largely through
the procurement of a development loan of £0.9m from HSBC. The development
loan will be converted to a five year term loan when construction of the
warehouse is completed. Our facility with HSBC provides ample headroom for
the Group to make the necessary investments in the year and to carry out the
repairs mentioned above to the chain cell operations. The business continues
to enjoy good relations with its bankers.
Taxation
The tax charge for the year was £0.3m, with an effective rate of tax of 29.9%
(2020 - 28.5%). The effective rate is higher than the standard UK tax rate
of 19% (2020 - 19%); this results from the blending effect of the different
rates of tax applied by each of the countries in which the Group operates, in
particular, our US operations' tax charge affects the blended rate. In any
financial year the effective rate will depend on the mix of countries in which
profits are made, however the Group continues to review its tax profile to
minimise the impact.
Capital expenditure
In 2021, the Group invested £2.1m (2020 - £2.1m) in property, plant and
equipment. In addition to £1.2m spent on both the UK and French warehouse
construction, the Group has made improvements to its employee facilities and
enhanced its engineering capabilities, purchasing equipment in welding, bolt
threading and pointing, and has continued to expand its bucket tooling
portfolio.
Balance sheet
Net assets of the Group have increased to £15.7m (2020 - £15.0m). A
foreign exchange gain of £0.1m (2020 - £0.1m loss) was recorded on the
re-translation of the net assets of the overseas operations, which has
increased retained earnings in the year.
Principal exchange rates
The Group reports its results in sterling, its presentational currency. The
Group operates in six other currencies and the principal exchange rates in use
during the year and the comparative figures for the year ending 31st December
2020 are shown in the table below.
Average rate Average rate Closing rate Closing rate
Currency Symbol Full year 2021 Full year 2020 31st Dec 2021 31st Dec 2020
Australian Dollar AUD 1.838 1.867 1.859 1.763
Chinese Renminbi (Yuan) CNY 8.875 8.880 8.606 8.890
Euro EUR 1.165 1.126 1.191 1.112
South African Rand ZAR 20.490 21.309 21.494 20.030
Thai Baht THB 44.073 40.404 44.690 40.838
United States Dollar USD 1.374 1.290 1.348 1.365
Our business model
The two segments of the Group are very different operations and serve
different markets, however together they provide diversification, strength and
balance to the Group and their activities.
The focus of the manufacturing business is to produce quality, technically
demanding components. The use of automated equipment allows us to produce in
high volumes whilst maintaining flexibility to respond to customer demands.
The material handling components business operates from a number of locations
around the globe allowing us to be close to our core markets. The focus of
the business is to provide innovative solutions drawing on our expertise in
material handling and access to a broad product range.
Performance of Braime Pressings Limited, manufacturer of deep drawn metal
presswork
Braime Pressings Limited sales of £9.5m were up £2.7m on prior year.
Intercompany sales and external sales were £4.3m and £5.2m as compared to
£3.0m and £3.8m respectively in 2020. Profit for the period was £0.8m
(2020 - loss £0.2m). The manufacturing arm benefitted from strong demand
from the automotive sector and from stronger intercompany sales as world
economies started to recover from the pandemic. The board believes the
business continues to add strategic value through its supply to the 4B
division and complementary engineering expertise.
Performance of the 4B division, world-wide distributor of components and
monitoring systems for the material handling industry
Revenues increased from £34.2m to £37.9m, with external sales up £2.2m.
The 4B group saw revenue growth as the world economies started to recover from
the covid pandemic. Revenue in the European market increased by £0.1m
compared to 2020 with the Americas increasing by £0.6m and China by £0.5m.
Profit for the period fell by £0.2m to £1.3m with the prior year benefitting
from the forgiveness of £0.4m of a government loan received by our US
subsidiary.
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 2021 2020
Turnover growth 1 11.0% (1.9%)
Gross margin 2 48.4% 46.7%
Operating profit before exceptional item 3 2.49m 1.38m
Stock days 4 184 days 182 days
Debtor days 5 54 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. The board is pleased with the significant
turnaround of Group revenues following the global pandemic.
2. Gross margin
Gross profit (revenue plus change in inventories less raw materials used) as a
percentage of revenue is monitored to maximise profits available for
reinvestment and distribution to shareholders. The increase in gross margin
is the result of recovery from the pandemic.
3. Operating profit before exceptional item
Sustainable growth in operating profit is a strategic priority to enable
ongoing investment and increase shareholder value. The increase in operating
profit before exceptional items reflects recovery from the pandemic.
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. Stockholding has increased due to
inventory build-up in December 2021 to mitigate the impact of anticipated
increases in raw materials costs in 2022.
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 have continued to improve and management are
focusing on reducing this to improve cashflows given the significant outlays
for the chain cell rebuild.
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.
Principal risks and uncertainties
In the current economic, political and physical, climate, the only certainty
is uncertainty. As the global economy emerges from the impact of the Covid
pandemic, increased demand and shortage of raw materials has placed upward
inflationary pressure on supply chains.
The recent invasion of Ukraine and consequent sanctions placed by the West on
Russia has increased political tensions worldwide. This is creating
volatility in the energy and commodities markets. Prior to this, the COP26
summit saw the UK government commit to ambitious targets to cut greenhouse
emissions, and this commitment is being passed onto businesses. The UK's
transition arrangements with the EU ended at the end of 2021. A trade
agreement with the EU has been struck but the finer details of the agreement
remain to be negotiated. The directors consider that these events pose all
business threats but may well create other opportunities. The Company's
short reporting lines of management means it can remain nimble footed to
sudden and or large changes in the business landscape.
The two principal risks associated with our particular business model are
discussed in the Chairman's statement.
General risks
The market remains challenging for our manufacturing division, due to pricing
pressures throughout the supply chain. The maintenance of the TS16949
quality standard is important to the Group and allows it to access growing
markets within the automotive and other sectors. A process of continual
improvement in systems and processes reduces this risk as well as providing
increased flexibility to allow the business to respond to customer
requirements.
Our 4B division maintains its competitive edge in a price sensitive market
through the provision of engineering expertise and by working closely with our
suppliers to design and supply innovative components of the highest
standard. In addition, ranges of complementary products are sold into
different industries. The monitoring systems are developed and improved on a
regular basis.
The directors receive monthly reports on key customer and operational metrics
from subsidiary management and review these. The potential impact of
business risks and actions necessary to mitigate the risks, are also discussed
and considered at the monthly board meetings. The directors have put in
place formal business continuity and disaster recovery plans with respect to
its UK and US operations. The more significant risks and uncertainties faced
by the Group are set out below:-
· Raw material price fluctuation:- The Group is exposed to fluctuations
in steel and other raw material prices and to mitigate this volatility, the
Group fixes its prices with suppliers where possible.
· Reputational risk:- As the Group operates in relatively small
markets any damage to, or loss of reputation could be a major concern.
Rigorous management attention and quality control procedures are in place to
maximise right first time and on time delivery. Responsibility is taken for
ensuring swift remedial action on any issues and complaints.
· Damage to warehouse or factory:- Any significant damage to a
factory or warehouse will cause short-term disruption. To mitigate these
risks, the Group has arrangements with key suppliers to step up supply in the
event of a disruption.
· Economic fluctuations:- The Group derives a significant proportion of
its profits from outside the UK and is therefore sensitive to fluctuations in
the economic conditions of overseas operations including foreign currency
fluctuations. As the Covid-19 pandemic has demonstrated, economies are
greatly intertwined and reverberations feed through the supply chain.
· Cyber security:- All businesses now rely almost totally on
computers, networks and systems with 'data' information held on them, and
require privacy and integrity of this data. The likelihood cyber security
attacks and security threats are key risks for every organisation. The Group
reviews its security measures regularly with its IT providers.
Financial instruments
The operations expose the Group to a variety of financial risks including the
effect of changes in interest rates on debt, foreign exchange rates, credit
risk and liquidity risk.
The Group's exposure in the areas identified above are discussed in note 19 of
the financial statements.
The Group's principal financial instruments comprise sterling and foreign cash
and bank deposits, bank loans and overdrafts, other loans and obligations
under finance leases together with trade debtors and trade creditors that
arise directly from operations. The main risks arising from the Group's
financial instruments can be analysed as follows:
Price risk
The Group has no direct exposure to securities price risk, as it holds no
listed equity instruments. The Group maintains a defined benefit scheme, the
asset valuations are subject to market changes (note 19).
Foreign currency risk
The Group operates a centralised treasury function which manages the Group's
banking facilities and all lines of funding. Forward contracts are on
occasions used to hedge against foreign exchange differences arising on cash
flows in currencies that differ from the operational entity's reporting
currency.
Credit risk
The Group's principal financial assets are bank balances, cash and trade
receivables, which represent the Group's maximum exposure to credit risk in
relation to financial assets.
The Group's credit risk is primarily attributable to its trade receivables.
Credit risk is mitigated by a stringent management of customer credit limits
by monitoring the aggregate amount and duration of exposure to any one
customer depending upon their credit rating. The Group also has credit
insurance in place. The amounts presented in the balance sheet are net of
allowance for doubtful debts, estimated by the Group's management based on
prior experience and their assessment of the current economic environment.
The credit risk on liquid funds is limited because the counterparties are
banks with high credit-ratings assigned by international credit-rating
agencies. The Group has no significant concentration of credit risk, with
exposure spread over a large number of counterparties and customers.
Liquidity risk
The Group's policy has been to ensure continuity of funding through acquiring
an element of the Group's fixed assets under medium term loans and finance
leases and arranging funding for operations via bank overdrafts to aid short
term flexibility.
Cash flow interest rate risk
Interest rate bearing assets comprise cash and bank deposits, all of which
earn interest at a fixed rate. The interest rate on the bank overdraft is at
market rate and the Group's policy is to keep the overdraft within defined
limits such that the risk that could arise from a significant change in
interest rates would not have a material impact on cash flows. The Group's
policy is to maintain other borrowings at fixed rates to fix the amount of
future interest cash flows.
The directors monitor the level of borrowings and interest costs to limit any
adverse effects on the financial performance of the Group.
Health and safety
We maintain healthy and safe working conditions on our sites and measure our
ability to keep employees and visitors safe. We continuously aim to improve
our working environments to ensure we are able to provide safe occupational
health and safety standards to our employees and visitors. The directors
receive monthly H&S reports and we carry out regular risk management
audits to identify areas for improvement and to minimise safety risks. As a
global business, the Group is able to tap into the experience of its various
international locations to share best practice and learning points. The
experience of the past two years has improved our plans and procedures in the
event of future pandemics.
Research and development
The Group continues to invest in research and development and from time to
time liaises with university engineering groups with a view to improving
features of its products. This has resulted in innovations in the products
which will benefit the Group in the medium to long term.
Duties to promote the success of the Company
Section 172 of the Companies Act 2006 requires the directors to act in a way
that they consider, in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to:
- the most likely consequences of any decision in the long term;
- the interest of the Company's employees;
- the need to foster the Company's business relationships with
suppliers, customers and others;
- the impact of the Company's operations on the community and
the environment;
- the desirability of the Company maintaining a reputation for
high standards of business conduct; and
- the need to act fairly between the members of the Company.
The board confirms that, during the year, it has had regard to the matters set
out above. Further details as to how the directors have fulfilled their
duties are set out below and in the Governance Report which in particular,
expands on directors' duties and stakeholder liaison.
Business ethics and human rights
The board is respectful of the Company's long history, and considers the
long-lasting impact of its decisions. We are committed to conducting our
business ethically and responsibly, and treating employees, customers,
suppliers and shareholders in a fair, open and honest manner. As a business,
we receive audits by both our independent auditors and by our customers and we
look to source from suppliers who share our values. We encourage our
employees to provide feedback on any issues they are concerned about and have
a whistle-blowing policy that gives our employees the chance to report
anything they believe is not meeting our required standards.
The Group is similarly committed to conducting our business in a way that is
consistent with universal values on human rights and complying with the Human
Rights Act 1998. The Group gives appropriate consideration to human rights
issues in our approach to supply chain management, overseas employment
policies and practices. Where appropriate, we support community
partnering.
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. As a global business, the Group
fully recognises and seeks to harness the benefits of diversity within its
work force. The Group is grateful to its employees for continuing to come to
work in what has been a worrying time for themselves and their families.
Environment
The Group's policy with regard to the environment is to understand and
effectively manage the actual and potential environmental impact of our
activities. Operations are conducted such that we comply with all legal
requirements relating to the environment in all areas where we carry out our
business. The Group continuously looks for ways to harness energy reduction
(electricity and gas) and water. The Company already has a 190KW solar
system on its UK premises and is currently seeking permission from the
national grid to extend our installation of solar panels. During the year,
the Group conducted an energy audit of its principal plant and property with
the help of energy consultants and has been implementing the findings to
reduce our energy consumption. During the period of this report the Group
has not incurred any fines or penalties or been investigated for any breach of
environmental regulations. The board is cognizant that climate change will
change the business landscape for the future and is working to understand its
wide-ranging impact on the Group's activities and operations.
Social and community matters
We recognise our responsibility to work in partnership with the communities in
which we operate and we encourage active employee support for their community
in particular, in aid of technical awareness and training. We regularly
participate in a number of education events encouraging interest in
engineering in young people. It is our policy not to provide political
donations.
Consolidated income statement for the year ended 31st December 2021 (audited)
2021 2020
£'000 £'000
Revenue 36,406 32,803
Changes in inventories of finished goods and work in progress 869 (63)
Raw materials and consumables used (19,656) (17,428)
Employee benefits costs (8,930) (8,408)
Depreciation and amortisation expense (1,334) (1,280)
Other expenses (4,954) (4,277)
Other operating income 88 30
Profit from operations before exceptional item 2,489 1,377
Exceptional item (1,217) -
Profit from operations 1,272 1,377
Finance expense (205) (191)
Finance income 3 9
Profit before tax 1,070 1,195
Tax expense (320) (341)
Profit for the year 750 854
Profit attributable to:
Owners of the parent 665 823
Non-controlling interests 85 31
750 854
Basic and diluted earnings per share 52.08p 59.31p
Consolidated statement of comprehensive income for the year ended 31st
December 2021 (audited)
2021 2020
£'000 £'000
Profit for the year 750 854
Items that will not be reclassified subsequently to profit or loss
Net pension remeasurement gain on post employment benefits 90 66
Items that may be reclassified subsequently to profit or loss
Foreign exchange gain/(loss) on re-translation of overseas operations 87 (133)
Other comprehensive income/(loss) for the year 177 (67)
Total comprehensive income for the year 927 787
Total comprehensive income attributable to:
Owners of the parent 817 744
Non-controlling interests 110 43
927 787
Consolidated balance sheet at 31st December 2021 (audited)
2021 2020
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 8,713 7,830
Intangible assets 25 37
Right of use assets 632 487
Total non-current assets 9,370 8,354
Current assets
Inventories 10,124 8,864
Trade and other receivables 6,211 5,855
Cash and cash equivalents 1,463 1,533
Total current assets 17,798 16,252
Total assets 27,168 24,606
Liabilities
Current liabilities
Bank overdraft 489 335
Trade and other payables 4,895 4,744
Other financial liabilities 2,902 2,133
Corporation tax liability 41 78
Total current liabilities 8,327 7,290
Non-current liabilities
Financial liabilities 2,046 2,075
Deferred income tax liability 24 278
Provision for liabilities 1,054 -
Total non-current liabilities 3,124 2,353
Total liabilities 11,451 9,643
Total net assets 15,717 14,963
Share capital 360 360
Capital reserve 257 257
Foreign exchange reserve (89) (151)
Retained earnings 15,382 14,800
Total equity attributable to the shareholders of the parent 15,910 15,266
Non-controlling interests (193) (303)
Total equity 15,717 14,963
Consolidated cash flow statement for the year ended 31st December 2021
(audited)
2021 2020
£'000 £'000
Operating activities
Net profit 750 854
Adjustments for:
Depreciation and amortisation 1,334 1,280
Foreign exchange gains/(losses) 210 (170)
Finance income (3) (9)
Finance expense 205 191
(Gain)/loss on sale of land and buildings, plant, machinery and motor vehicles (38) 1
Adjustment in respect of defined benefit scheme 91 71
Income tax expense 320 341
Income taxes paid (679) (168)
1,440 1,537
Operating profit before changes in working capital and provisions 2,190 2,391
Increase in trade and other receivables (288) (356)
Increase in inventories (1,259) (291)
Increase in trade and other payables 179 942
Increase in provisions 1,054 -
(314) 295
Cash generated from operations 1,876 2,686
Investing activities
Purchases of property, plant, machinery and motor vehicles and intangible (2,074) (2,057)
assets
Sale of land and buildings, plant, machinery and motor vehicles 73 13
Interest received 2 4
(1,999) (2,040)
Financing activities
Proceeds from long term borrowings 1,145 1,117
Repayment of borrowings (452) (419)
Repayment of hire purchase creditors (182) (217)
Repayment of lease liabilities (234) (228)
Bank interest paid (124) (124)
Lease interest paid (65) (38)
Hire purchase interest paid (16) (29)
Dividends paid (173) (173)
(101) (111)
(Decrease)/increase in cash and cash equivalents (224) 535
Cash and cash equivalents, beginning of period 1,198 663
Cash and cash equivalents, end of period 974 1,198
Consolidated statement of changes in equity for the year ended 31st December
2021 (audited)
Foreign Non-
Share Capital Exchange Retained Controlling Total
Capital Reserve Reserve Earnings Total Interests 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 subsidiaries
consolidated 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 1st January 2021 360 257 (151) 14,800 15,266 (303) 14,963
Comprehensive income
Profit - - - 665 665 85 750
Other comprehensive income
Net pension remeasurement gain recognised directly in equity
- - - 90 90 - 90
Foreign exchange gains on re-translation of overseas subsidiaries consolidated
operations
- - 62 - 62 25 87
Total other comprehensive income - - 62 90 152 25 177
Total comprehensive income - - 62 755 817 110 927
Transactions with owners
Dividends - - - (173) (173) - (173)
Total transactions with owners - - - (173) (173) - (173)
Balance at 31st December 2021 360 257 (89) 15,382 15,910 (193) 15,717
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 Braime Group PLC as the numerator.
The weighted average number of outstanding shares used for basic earnings per
share amounted to 1,440,000 shares (2020 - 1,440,000). There are no
potentially dilutive shares in issue.
Dividends paid 2021 2020
£'000 £'000
Equity shares
Ordinary shares
Interim of 7.80p (2020 - 8.00p) per share paid on 25th May 2021 37 38
Interim of 4.25p (2020 - 4.00p) per share paid on 14th October 2021 20 19
57 57
'A' Ordinary shares
Interim of 7.80p (2020 - 8.00p) per share paid on 25th May 2021 75 77
Interim of 4.25p (2020 - 4.00p) per share paid on 14th October 2021 41 39
116 116
Total dividends paid 173 173
An interim dividend of 8.20p per Ordinary and 'A' Ordinary share will be paid
on 8th June 2022.
2. SEGMENTAL INFORMATION
Central Manufacturing Distribution Total
2021 2021 2021 2021
£'000 £'000 £'000 £'000
Revenue
External - 5,166 31,240 36,406
Inter Company 2,038 4,287 6,704 13,029
Total 2,038 9,453 37,944 49,435
Profit
EBITDA (740) 807 2,539 2,606
Finance costs (69) (37) (99) (205)
Finance income - 1 2 3
Depreciation and amortisation (608) (34) (692) (1,334)
Tax expense 144 30 (494) (320)
(Loss)/profit for the period (1,273) 767 1,256 750
Assets
Total assets 5,839 6,402 14,927 27,168
Additions to non current assets 1,219 11 1,298 2,528
Liabilities
Total liabilities 2,109 2,525 6,817 11,451
Central Manufacturing Distribution Total
2020 2020 2020 2020
£'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
3. BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the UK (IFRSs as
adopted by the UK), IFRIC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated financial
statements have been prepared under the historical cost convention. The
accounting policies adopted are consistent with those of the annual financial
statements for the year ended 31st December 2021 as described in those
financial statements.
4. ANNUAL GENERAL MEETING
The Annual General Meeting of the members of the company will be held at the
registered office of the company at Hunslet Road, Leeds, LS10 1JZ on Thursday
23rd June 2022 at 11.45am. The annual report and financial statements will
be sent to shareholders by 25th May 2021 and will also be available on the
company's website (www.braimegroup.com (http://www.braimegroup.com) ) from
that date.
The Company will take into account any Government guidance or legislation in
force at the time of the AGM and will implement any measures it believes
necessary to protect the health and safety of attendees. Any changes to the
format of the AGM will be communicated to shareholders through the Company's
website and, where appropriate, by stock exchange announcement.
5. THE ANNOUNCEMENT
The financial information set out in this announcement does not constitute
statutory accounts as defined by section 434 of the Company Act 2006. The
financial information for the year ended 31st December 2021 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 2020 have been delivered
to the Registrar of Companies, and those for 2021 will be delivered in due
course.
6. EVENTS AFTER THE REPORTING PERIOD
In April 2022, the Group entered into an exclusivity arrangement with one of
its trading partners to expand Group sales distribution.
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