REG - Braime Group PLC - Annual Results for the Year Ended 31 December 2022
24/04/2023 10:15
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RNS Number : 2265X Braime Group PLC 24 April 2023
24 April 2023
BRAIME GROUP PLC
("Braime" or the "Company" and with its subsidiaries the "Group")
ANNUAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2022
At a meeting of the directors held today, the accounts for the year ended 31st
December 2022 were submitted and approved by the directors. The accounts
statement is as follows:
Chairman's statement
Overview
In my last full year before stepping down as Group Managing Director, I am
delighted to be able to announce a new record annual result for the Group in
2022, with sales revenues of £44.9m, up £8.5m from £36.4m in 2021, and
profit from operations at £4.1m, up £2.8m from £1.3m in 2021. The resulting
earnings per share are increased to 188.96p compared to 52.08p in the prior
year. Although the above result has been boosted by an exceptional foreign
exchange gain of £0.8m due to the strengthening of the US Dollar against
Sterling on the re-translation of our overseas earnings, the underlying
strength of the result remains remarkable.
The result in 2022 also follows on from two better than expected results
during the years of the pandemic. During the period, the Company has been
fortunate to benefit from strong demand from the Group's two key areas of
sales; in Braime Pressings strong sales of components for oil filters used in
commercial vehicles, required to help maintain road transportation; and
secondly, sales in the 4B branch of the business, of components used in the
storage and processing of food related production. In both cases, we were very
largely able to continue manufacturing and distributing our products globally
due to the determination of our managers and staff to continue working as
close to "normal" as possible. Although we expected a "post pandemic bounce",
the level, and the immediacy of the additional demand, significantly exceeded
our expectations, with the re-commencement of investment in capital projects
delayed by the pandemic being larger and faster than expected.
While demand was badly affected in some areas by the invasion of Ukraine by
Russia, the investment in new plant and machinery was very largely transferred
elsewhere and the global nature of our business profile remains one of the key
underlying strengths of our multinational trading business. The principal
challenge faced by our management in 2022 was the shortage of, and the price
escalation in, the cost of all raw materials, and the huge jump in both the
cost and the delays in sea freight. Fortunately, across the Group, we had
taken steps to build up our orders for materials stocks. These issues of
course, did affect our cash flow and borrowings as discussed elsewhere.
Ongoing inflation, and the need to find new sources of supply remain our
largest challenges.
Dividends
The Company paid an interim dividend of 4.75p in October 2022. Based on the
very positive result above, the directors propose paying a second interim
dividend of 9.0p on 26th May 2023 to the holders of the Ordinary and "A"
Ordinary Shares on the share register on 12th May 2023. The dividend paid in
relation to 2022 has increased to 13.75p, compared to 12.45p in 2021.
Capital Investment
The most pleasing outcome of the above result is that the cash flow generated
from operations has enabled us to continue to confidently pursue our long-term
strategy of investing in plant and machinery, in order to improve our
manufacturing business and maintain our investment in developing new
innovative product.
In 2022, the Company invested £2.0m in capital investment, enhancing the area
of the factory used to manufacture chain products. We were also thrown by the
unexpected additional expense of having to rebuild a very large area of our
original premises. As previously reported, the unexpected collapse of part of
the rear of our Hunslet Road facility forced us to rebuild an area of our
Grade II Listed building dating from circa 1850. This catastrophe followed the
surprise discovery of a water well within our site, which had caused a
significant escalation in the cost of our warehouse extension. We have used
the opportunity to improve our main manufacturing facility and doubled the
area of the factory available for our chain business, a growth area of the
Group and added other adjacent storage and production areas, simplify the flow
of goods between the various activities on site, and of course also improve
the general condition of the facility to reduce the cost of future
maintenance. The project is on schedule for completion by July 2023.
During the year we spent £1.4m on the capital element of the above project
and expect to spend a further £0.3m in completing these works and in new
storage racking to cope with the higher volumes of raw material stored on
site. We have also invested in extending our facilities for product
development, and in improving our employee facilities, both in the offices and
on the shop floor, by adding new "break rooms", toilets, and locker rooms.
Other significant capex expenditures include £0.3m in modernising a 600-tonne
hydraulic press specifically to cope with new presswork expected to come on
stream in late 2023, £0.1m in renewing key robotic production lines, and
£0.1m in purchasing tooling for new product and various new machine tools to
improve productivity and add capacity. We also continue to invest in
generating solar energy, as discussed in the Group strategic report, and plan
to further extend capture of solar energy to mitigate the spiralling increases
in utility costs. Each year, we do need to continue to find further funds to
maintain and improve our headquarters and main manufacturing facility. This
expenditure in modernising our facilities is funded through profit generation
and remains essential to the future of the business.
New Business and Product Development
During 2022, we have successfully integrated the distribution of additional
electronic components purchased in 2022 while continuing with our ongoing
program of developing both mechanical and electronic innovative new
products. In 2022 new innovative 4B products bought to market include a
range of Rotary Valves, used primarily in pneumatic material handling, three
ranges of exceptionally robust plastic elevator buckets designed for handling
industrial products such as aggregates, cement and glass, and developed new
steel fittings to strengthen the lip of buckets to cope with exceptionally
abrasive product such as potash.
We also launched our "4B IE Node". This is a new controller/monitor designed
for bulk material handling systems. The IE node provides a user friendly and
entirely user programable standalone alternative to PLC's, which in general
require the installation of externally designed bespoke software. The IE Node
can be integrated with our existing range of 4B sensors used to continuously
monitor the condition of handling and processing equipment to give the user
advance warning of potential problems and risks and provide data to improve
plant maintenance The Company has also just launched a 4B Encoder, another
product which uniquely can be simply and fully programmed by the end user
themselves to cover the full spectrum of market requirements, which would
otherwise involve selecting from a very large range of bespoke alternative
encoders. Encoders are used to accurately position valves and gates and are
widely used in both material handling and automation and so opens a further
new market to the 4B business.
The founders of the Braime business, Harry Braime, my grandfather, his elder
brother Thomas Braime, and their technical manager and partner, Stanley
Dobson, built the existing business, founded in 1888, primarily by
continuously designing user-friendly improvements to widely used existing and
common "widgets". They were always focused on solving the common engineering
problems of the end user. The current business tries to follow their example,
believing that this is the only way for a small independent business to
survive in an increasingly competitive manufacturing world.
Cash Flow and Stocks
These are detailed fully in the Group strategic report but it is necessary to
highlight the particular requirement in 2022 to finance, not just an increase
in receivables of £2.7m (related to the higher volume of sales), but also the
quite exceptional increase in stocks of £3.2m, which were needed to mitigate
the exceptional increase in the cost of materials and, wherever possible, to
protect customers from the negative effects of rising prices and the longer
delays in delivery. These problems have been the greatest challenges to our
management throughout 2022.
Overall Strategy
Our strategy remains largely unchanged; continuing to invest in constantly
improving our production processes; and exploring new potential global markets
for our niche products and developing new innovative solutions for our
customers' common engineering problems. It is the long-standing pursuit of
this fundamental strategy which over many years has led to the improvement in
our performance and to our recent record result in 2022.
Board Re-structure
On 1st February 2023, I stepped down from my role as Managing Director and the
Group appointed my two sons, Carl and Alan Braime, as joint Chief Executives.
Both have been on the Board since 2010 and have both experience and
complimentary skills, including an in-depth understanding of the industries in
which the business is involved and the needs of our key stakeholders. Together
they are uniquely suited and well placed to transition the Group to its next
phase of growth.
As announced on 19th April 2023, we are delighted that Mark Cooper, Tony
Steels and Philip Stockdale will be joining the Board as non-executive
directors on 1st May 2023. Mark brings expertise in the steel and automotive
industry, Tony in the manufacture of complex capital equipment, and Philip has
extensive experience in the electronic and the bulk material handling
industries, as well as more recently, in the energy sector. Their combined
experience in industries closely related to our own will bring tremendous
value to the board.
Their appointments allow a short period of overlap with our two longstanding
non-executives, Peter Alcock, and Andrew Walker. Both Peter and Andrew
have signalled their intention to retire from the board with effect from 22nd
of June 2023, at our AGM. Their extremely valuable contribution has guided the
Group through some very challenging periods and helped to reshape the Group,
enabling it to reach its current much stronger overall position.
Staff
I need to end my tenure as Group Managing Director by thanking all those staff
who have given me so much help and support over many years and in particular
thank my immediate peers without whose ideas and enthusiasm nothing would have
been possible. Ultimately it is always the individual staff who both make a
company and create its future.
Current Trading and Outlook
Given the current instability post the pandemic, and the ongoing energy
crisis, it is even more difficult than usual to predict the future with any
degree of certainty. None of us know if the war in Ukraine or the current
deep geo-political tensions between the USA and China will cease to be a major
concern.
While overall the Group continues to enjoy strong positive trading, different
parts of our global group at this time are unusually performing quite
differently. While the Asian regions of our markets remain relatively subdued,
central Europe and Africa continue to be affected by energy shortages, but the
US economy, our major market, continues to power buoyantly ahead, perhaps
until they approach the instability which usually accompanies an election
year.
The major challenges facing our management team throughout 2022 remain the
same in 2023 and are largely common across the Group. These challenges
include high and unpredictable cost inflation and the unreliability of
supplies. Both threaten the competitiveness of the business and create an
urgency in finding new and more stable sources of supply; both also divert
finite management time away from the normal primary focus of the business, the
search for new sales. Nevertheless, my hope remains that we will finally be
able to return to re-focus on the future and the pursuit of our long-term
strategy to maintain steady growth.
The current unstable political and economic background is not conducive to
encourage capital investments in new machinery and so also threatens the
volume of sales. The two key ingredients of success in the material handling
industry are firstly the ability to consistently deliver the spare parts
needed immediately to maintain critical plant in storage and processing plant,
such as bucket elevators, and, secondly, a willingness to maintain, when
necessary, prices for the duration of the contract in order to retain the
customers confidence that new investment can be installed both on time and on
the original budget, even when this can involve absorbing cost increases and
accepting lower margins. So while business overall currently remains very
strong, these issues, lower volumes, squeezed margins, the cost of carrying
larger stocks, (and the accompanying cash flow requirements), can all be seen
in our current trading. Repeating in 2023 the quite exceptional result
achieved in 2022 may be an overambitious target but this does not stop us
trying to overcome these challenges.
Nicholas Braime, Chairman
24th April 2023
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 2022.
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 2022 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 second year running. For the year ended 31st
December 2022, the Group generated revenues of £44.9m, up £8.5m from prior
year. Profit from operations before exceptional costs was £4.4m, up £2.0m
from prior year and EBITDA before exceptional costs was £6.0m up £2.2m from
prior year. As mentioned in note 3 of the financial statements, exceptional
costs of £0.4m relate to additional costs in respect of extensive repairs to
the chain cell area of our Hunslet Road property, following the discovery of a
series of structural faults along three walls in 2021.
After exceptional costs, profit before tax was £3.8m, up £2.7m from prior
year.
At 31st December 2022, the Group had net assets of £19.2m.
Cash flow
Inventories increased by £3.2m as the Group built stock to accommodate
increased customer demand and also as a result of the impact of inflation on
raw materials. Trade and other receivables increased by £2.7m reflecting
increased customer activity during the period close to the year end. There
was an increase in our trade and other payables of £4.9m reflecting the
increase in purchases of stock and a reclassification of the balance of the
chain cell provision of £481,000 from provisions to accruals. In total the
business generated funds from operations of £3.4m (2021 - £1.9m). The
Group continued its investment programme during the year, spending £2.1m on
property, plant and equipment; £1.4m of this was on the construction of the
new warehouse, enhancements in the chain cell area and improved employee
facilities of our Hunslet property in the UK, and £0.7m on purchases of plant
and machinery, mainly for our manufacturing division. The Group also spent
£0.7m on the purchase of an exclusivity agreement with one of its trading
partners as announced in the 2021 financial statements. After the payment of
other financial costs and the dividend, the cash balance (net of overdraft)
was £0.8m, a decrease of £0.2m from the prior year.
Bank facilities
The Group's operating banking facilities are renewed annually. At the year
end, the available headroom on its operating facilities was £2.8m. The
development loan of £0.9m which was used to fund the new warehouse
construction was converted to a five-year term loan in 2022. As previously
announced, the Group has additionally obtained a development loan facility of
£1.5m from its bankers HSBC, for the chain cell project. This carries an
interest rate of 2.75% above base and is also expected to be converted to a
five-year term loan upon completion of the project. The chain cell facility
was not utilised until February 2023 and at the time of writing, the Group has
only drawn down £978,000 of the chain cell facility. The business
continues to enjoy good relations with its bankers.
Taxation
The tax charge for the year was £1.1m, with an effective rate of tax of 28.8%
(2021 - 29.9%). The effective rate is higher than the standard UK tax rate
of 19% (2021 - 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 2022, the Group invested £2.8m (2021 - £2.1m) in property, plant and
equipment and intangible assets. In addition to £1.4m spent on the UK
warehouse construction, chain cell enhancements and improved employee
facilities, the Group has enhanced its engineering capabilities, purchasing
equipment in robotics, hydraulic press capability, and has continued to expand
its belt cutting facilities portfolio. The intangible asset relates to the
purchase of exclusivity rights with one of its key trading partners.
Balance sheet
Net assets of the Group have increased to £19.2m (2021 - £15.7m). Sterling
weakened considerably against the United States dollar in 2022.
Consequently, a foreign exchange gain of £0.8m (2021 - £0.1m gain) 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 2022 and the comparative figures for 2021 are shown in the table below.
Average rate Average rate Closing rate Closing rate
Currency Symbol Full year 2022 Full year 2021 31st Dec 2022 31st Dec 2021
Australian Dollar AUD 1.777 1.838 1.771 1.859
Chinese Renminbi (Yuan) CNY 8.354 8.875 8.394 8.606
Euro EUR 1.170 1.165 1.128 1.191
South African Rand ZAR 20.155 20.490 20.385 21.494
Thai Baht THB 43.159 44.073 41.589 44.690
United States Dollar USD 1.232 1.374 1.204 1.348
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 £11.8m were up £2.4m on prior year.
External sales and intercompany sales were £6.7m and £5.1m as compared to
£4.3m and £5.2m respectively in 2021. Profit for the period was £1.0m
(2021 - £0.8m). The manufacturing arm benefitted from strong demand from
the automotive sector as well as from the development of new products for the
building sector. 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 supplier of components and
monitoring systems for the material handling industry
Revenues increased from £37.9m to £46.3m, with external sales up £6.9m.
The 4B group saw revenue growth as the world economies continued to recover
from the Covid pandemic with investment projects being undertaken by customers
that had been delayed for a couple of years. Outside of the UK, revenue in
the European market increased by £0.5m compared to 2021 with the Americas
increasing by £4.9m, Australia and Asia by £1.0m and Africa by £0.1m driven
by strong sales performance across the division. Profit for the period
increased by £1.5m to £2.8m.
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 2022 2021
Turnover growth 1 23.3% 11.0%
Gross margin 2 47.6% 48.4%
Operating profit before exceptional item 3 4.45m 2.49m
Stock days 4 174 days 184 days
Debtor days 5 58 days 54 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 growth of
Group revenues with strong demand across most product areas and geographical
sectors.
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 decrease in gross margin
is the result of higher material prices, especially in respect of steel
products.
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 strong customer demand as confidence
increased following the Covid-19 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. Stock days have decreased due to
the unwinding of the inventory build-up in December 2021, which was put in
place 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 increased as a result of higher sales,
particularly towards the end of the financial year.
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
The continued conflict in Ukraine as well as other geo-political pressures
create uncertainties in the world markets in which the Group operates.
The Group's short reporting lines of management means it can remain nimble
footed to sudden and/or large changes in the business landscape.
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 of 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 21).
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.
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 and is currently looking at the new reporting requirements that may
fall due in the future. The Group continuously looks for ways to harness
energy reduction (electricity and gas) and water. The Company already has a
190KW solar PV system on its UK premises and has recently installed a further
120KW solar PV system. 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 2022 (audited)
2022 2021
£'000 £'000
Revenue 44,879 36,406
Changes in inventories of finished goods and work in progress 2,925 869
Raw materials and consumables used (26,456) (19,656)
Employee benefits costs (10,260) (8,930)
Depreciation and amortisation expense (1,535) (1,334)
Other expenses (5,391) (4,954)
Other operating income 287 88
Profit from operations before exceptional item 4,449 2,489
Exceptional item (350) (1,217)
Profit from operations 4,099 1,272
Finance expense (282) (205)
Finance income 5 3
Profit before tax 3,822 1,070
Tax expense (1,101) (320)
Profit for the year 2,721 750
Profit attributable to:
Owners of the parent 2,768 665
Non-controlling interests (47) 85
2,721 750
Basic and diluted earnings per share 188.96p 52.08p
Consolidated statement of comprehensive income for the year ended 31st
December 2022 (audited)
2022 2021
£'000 £'000
Profit for the year 2,721 750
Items that will not be reclassified subsequently to profit or loss
Net pension remeasurement gain on post employment benefits 128 90
Items that may be reclassified subsequently to profit or loss
Foreign exchange gain on re-translation of overseas operations 815 87
Other comprehensive income for the year 943 177
Total comprehensive income for the year 3,664 927
Total comprehensive income attributable to:
Owners of the parent 3,727 817
Non-controlling interests (63) 110
3,664 927
Consolidated balance sheet at 31st December 2022 (audited)
2022 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 9,782 8,713
Intangible assets 636 25
Right of use assets 425 632
Total non-current assets 10,843 9,370
Current assets
Inventories 13,289 10,124
Trade and other receivables 8,760 6,211
Cash and cash equivalents 1,458 1,463
Total current assets 23,507 17,798
Total assets 34,350 27,168
Liabilities
Current liabilities
Bank overdraft 672 489
Trade and other payables 8,635 4,895
Other financial liabilities 3,219 2,902
Corporation tax liability 195 41
Total current liabilities 12,721 8,327
Non-current liabilities
Financial liabilities 2,343 2,046
Deferred income tax liability 92 24
Provision for liabilities - 1,054
Total non-current liabilities 2,435 3,124
Total liabilities 15,156 11,451
Total net assets 19,194 15,717
Share capital 360 360
Capital reserve 257 257
Foreign exchange reserve 742 (89)
Retained earnings 18,091 15,382
Total equity attributable to the shareholders of the parent 19,450 15,910
Non-controlling interests (256) (193)
Total equity 19,194 15,717
Consolidated cash flow statement for the year ended 31st December 2022
(audited)
2022 2021
£'000 £'000
Operating activities
Net profit 2,721 750
Adjustments for:
Depreciation and amortisation 1,535 1,334
Foreign exchange gains 622 210
Finance income (5) (3)
Finance expense 282 205
Gain on sale of land and buildings, plant, machinery and motor vehicles (188) (38)
Adjustment in respect of defined benefit scheme 132 91
Income tax expense 1,101 320
Income taxes paid (759) (679)
2,720 1,440
Operating profit before changes in working capital and provisions 5,441 2,190
Increase in trade and other receivables (2,669) (288)
Increase in inventories (3,165) (1,259)
Increase in trade and other payables 4,870 179
(Decrease)/increase in provisions (1,054) 1,054
(2,018) (314)
Cash generated from operations 3,423 1,876
Investing activities
Purchases of property, plant, machinery and motor vehicles (2,053) (2,074)
Purchase of intangible assets (725) -
Sale of land and buildings, plant, machinery and motor vehicles 216 73
Interest received 1 2
(2,561) (1,999)
Financing activities
Proceeds from long term borrowings 236 1,145
Repayment of borrowings (392) (452)
Repayment of hire purchase creditors (158) (182)
Repayment of lease liabilities (268) (234)
Bank interest paid (210) (124)
Lease interest paid (60) (65)
Hire purchase interest paid (11) (16)
Dividends paid (187) (173)
(1,050) (101)
Decrease in cash and cash equivalents (188) (224)
Cash and cash equivalents, beginning of period 974 1,198
Cash and cash equivalents, end of period 786 974
Consolidated statement of changes in equity for the year ended 31st December
2022 (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 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 losses 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 1st January 2022 360 257 (89) 15,382 15,910 (193) 15,717
Comprehensive income
Profit - - - 2,768 2,768 (47) 2,721
Other comprehensive income
Net pension remeasurement gain recognised
directly in equity - - - 128 128 - 128
Foreign exchange gains on re-translation of
overseas subsidiaries consolidated operations - - 831 - 831 (16) 815
Total other comprehensive income - - 831 128 959 (16) 943
Total comprehensive income - - 831 2,896 3,727 (63) 3,664
Transactions with owners
Dividends - - - (187) (187) - (187)
Total transactions with owners - - - (187) (187) - (187)
Balance at 31st December 2022 360 257 742 18,091 19,450 (256) 19,194
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 (2021 - 1,440,000). There are no
potentially dilutive shares in issue.
Dividends paid 2022 2021
£'000 £'000
Equity shares
Ordinary shares
Interim of 8.20p (2021 - 7.8p) per share paid on 24th May 2022 39 37
Interim of 4.75p (2021 - 4.25p) per share paid on 14th October 2022 23 20
62 57
'A' Ordinary shares
Interim of 8.20p (2021 - 7.80p) per share paid on 24th May 2022 79 75
Interim of 4.75p (2021 - 4.25p) per share paid on 14th October 2022 46 41
125 116
Total dividends paid 187 173
An interim dividend of 9.00p per Ordinary and 'A' Ordinary share will be paid
on 26th May 2023.
2. SEGMENTAL INFORMATION
Presswork
Central Manufacturing 4B Total
2022 2022 2022 2022
£'000 £'000 £'000 £'000
Revenue
External - 6,688 38,191 44,879
Inter Company 1,880 5,149 8,087 15,116
Total 1,880 11,837 46,278 59,995
Profit
EBITDA (183) 1,118 4,699 5,634
Finance costs (114) (63) (105) (282)
Finance income - 4 1 5
Depreciation and amortisation (612) (35) (888) (1,535)
Tax expense (198) - (903) (1,101)
(Loss)/profit for the period (1,107) 1,024 2,804 2,721
Assets
Total assets 7,225 9,206 17,919 34,350
Additions to non current assets 1,886 8 922 2,816
Liabilities
Total liabilities 1,918 3,771 9,467 15,156
Presswork
Central Manufacturing 4B 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
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 2022 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
22nd June 2023 at 11.45am. The annual report and financial statements will
be sent to shareholders by 22nd May 2023 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 2022 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 2021 have been delivered
to the Registrar of Companies, and those for 2022 will be delivered in due
course.
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