5th Sep 2006 07:03
Brammer PLC05 September 2006 2006 INTERIM RESULTS FURTHER REVENUE GROWTH, CONTINUED IMPROVEMENT IN PROFITABILITY AND MARKET SHARE Brammer plc, the European industrial services group, today announces its resultsfor the six months ended 30 June 2006. FINANCIAL SUMMARY 2006 2005 £m £m ChangeTotal operations - all continuing Turnover 157.5 145.5 8.2% Profit before tax on ordinary activities before exceptionalnon cash pension curtailment 6.0 5.3 13.2% Exceptional non cash pension curtailment 2.8 - Profit before tax 8.8 5.3 Net debt (52.9) (51.5) Earnings per share pence pence Basic 12.6 7.6 65.8% Diluted 12.6 7.6 65.8% Before exceptional non cash pension curtailment and related tax charge 8.5 7.6 11.8% Highlights • Sales growth targets met and European market leading positionfurther strengthened with Brammer now represented in over 265 locations in 11countries • Overall sales per working day grew 7.2% with the growth rateaccelerating throughout the half representing significant market share gains • Key account sales grew by 10%. With a high pipeline of new prospects,an acceleration in the growth rate is expected in the second half • Trading profit margin improved reflecting increased volumes and costcontrol • Acquisition of Ramaekers BV, a privately owned Belgian business inJune, now gives Brammer a leading position in bearings and mechanical powertransmission in that country • Cash generated from operating activities increased to £4.3 million(2005: £3.9 million). David Dunn, chairman, said: "Further progress has been made with all elements of our strategy. Salesgrowth has met our objective and we have made good progress in strengthening ourcapabilities. We continue to search for bolt on opportunities that fit ourstrict criteria and that will increase our share of the highly fragmentedEuropean markets in which we operate. We were delighted to welcome Ramaekers tothe Group which now gives us a leading position in bearings and mechanical powertransmission in Belgium. "Trading since the end of June has been satisfactory and this encourages us toexpect further good progress in the second half. "The Board has declared an increased interim dividend of 1.8p (2005 1.65p). Thiswill be paid on the 3rd November 2006 to shareholders on the register at theclose of business on 6th October 2006." Enquiries: Brammer plc 020 7638 9571 (8.00am - 1.00pm) 0161 902 5599 (1.00pm - 4.30pm) David Dunn, chairman Ian Fraser, chief executive Paul Thwaite, finance director Issued: Citigate Dewe Rogerson Ltd 020 7638 9571 Martin Jackson BRAMMER PLC 2006 PRELIMINARY RESULTS CHAIRMAN'S STATEMENT Overview It is pleasing to announce another set of satisfactory results for Brammer whichdemonstrate continued progress across a broad front. In the six months to 30June 2006 turnover increased by 8.2% to £157.5m and profit before tax andexceptional non cash pension curtailment was £6.0m compared to £5.3m for theequivalent period in 2005. Basic earnings per share on this basis grew 12% to8.5p from 7.6p in 2005. The exceptional non cash pension curtailment of £2.8m has been determined inaccordance with IFRS (IAS 19 "Employee benefits"), and reflects the impact ofthe closure of the defined benefit section of the group's UK retirement benefitsscheme to future accrual with effect from 1 March 2006. This, together withactuarial gains, has reduced the pension deficit to £21.7m (December 2005:£33.7m) Trading The increase in sales was spread across all geographic locations with theexception of France which was unchanged having been affected by a slower periodin the important automotive business sector. Growth in all other territories wasencouraging and Brammer continues to win market share especially in its keycorporate accounts business. Markets remain highly competitive but we have been able to capitalise upon ourunique European footprint to leverage both sales and purchasing opportunities toour advantage. As we have previously indicated, gross margins remain underpressure. However, as volumes have increased, improved purchasing and tightcontrol of sales, distribution, and administration costs are reflected in anoverall improvement in the trading profit margin (before exceptional non cashpension curtailment) which increased to 4.6%. Cash flow during the period, which includes the initial payment of £1.7m for theacquisition of Ramaekers, was also satisfactory and resulted in closing net debtof £52.9m. Strategy Further progress has been made with all elements of the strategy that we havepreviously outlined. Sales growth has met our objective and we have made goodprogress in strengthening our capabilities through recruitment and training, andin our systems development. Importantly the pipeline of new corporate accountprospects remains high and our ability to implement and service our key customerprogrammes continues to improve. Our systems and people skills are critical tosuccessful growth and, following an increase in investment, we are confident ofour ability to advance further in these areas. In our last two reports to shareholders we have referred to the opportunities toacquire quality bolt on acquisitions and increase our share of the highlyfragmented European markets in which we operate. We were therefore delighted toannounce the acquisition of Ramaekers BV, a privately owned Belgian business inJune. In 2005 Ramaekers had sales of €9.8m with EBIT of €0.8m. Together withBrammer's existing small presence in Belgium this acquisition gives us a leadingposition in bearings and mechanical power transmission in that country. As ahigh quality, profitable business, Ramaekers fits precisely into Brammer'sacquisition criteria and we welcome Rudi Ramaekers and his team to ourorganisation. We will continue to search for further quality businesses in our chosenterritories to increase the scope and range of Brammer against a very strict setof acquisition measures. We expect to be able to fund these acquisitionopportunities from within our existing resources. Dividend The interim dividend is 1.8p an increase of 9.1% over last year. This will bepaid on 3 November to shareholders on the register at the close of business on 6October 2006. Outlook The outlook for the remainder of the year is positive and we expect to be ableto maintain our progress during this period. David Dunn5 September 2006 CHIEF EXECUTIVE'S REVIEW Overview In the first half of 2006 we further strengthened Brammer's market leadingposition in Europe. We concentrated on the implementation of our clear andsimple strategy and continued to progress the concept of "One Brammer" - abusiness which can offer consistent products and services in each of over 265locations in 11 countries. Our ultimate aim is to deliver to our customers aconsistent quality of service across the entire bearings, power transmission andfluid power product range anywhere in Europe. Operational Review Brammer is the leading European supplier of technical components and relatedservices to the maintenance, repair and operations ("MRO") markets. In thefirst half of 2006 revenues increased by 8.2% to £157.5 million, whilstoperating profit before exceptional items and interest increased by 11% to £7.3million. Profits improved both on the continent and in the UK. Operating marginimproved to 4.6%. Cash generated from operating activities was £4.3 million(£3.9 million in the half year to June 2005). At the end of the first half, total headcount in Brammer (on a full-timeequivalent basis and adjusted for acquisitions) was 1,933 compared to 1,866 atthe end of last year. Revenues per head increased by 7.2% to £81,500 for thehalf year compared with the second half of last year, indicating continuingimprovement in productivity. In the UK, revenues on a sales per working day basis ("SPWD") increased by 2.5%,with a slight decline in the first quarter followed by strong growth of 5.6% inthe second quarter, as a significant number of new contracts came on stream. Weincreased sales through Insites and part-time insites (those locations where wehave several regular clinics with the customer's staff each week) by 17.3%.Customer locations where we have contracted to provide either full or part-timeregular on site support, or where we provide a consigned stock solution to thesite, grew by 13.9%. Several new contracts were won with customers such asBNFL, British Nuclear Group, Tarmac, Cemex, Associated British Foods and IESA. In Germany SPWD grew by 7.3%, costs were tightly controlled and operating profitincreased by 14.4% compared with last year. Excellent progress was made on keyaccounts, with revenues in this segment up 21.8%. New contracts won includedVisteon with Hagemeyer, M+W Zander, Rexam, Benteler and Norske Skog. Headcountremained steady at 395 and productivity as measured by sales per head increasedby 6.7% compared with the first half of 2005. In France SPWD were flat compared with the first half of 2005. Declines in theautomotive sector, which represents over 20% of our revenues, could not beoffset by growth in industrial key accounts and base MRO business. Despitetight control of costs, operating profit declined by 5.9% to £1.1 million. Newcontracts were won with DCN, Timken, Jean Caby and Cofatech. In Spain SPWD grew 4.8%. We continued to increase our sales to the MRO market(up 6.7%) reducing further our exposure to the more cyclical original equipmentmanufacturers ("OEM") marketplace (up 5.1%). As stated last year, theconsiderable SDA investment in both marketing and our branch network has nowproduced a positive return with operating profit up 10.7%. Key account salesgrew by 11.1%, but still represent only 18.2% of Spanish revenues. We won newcontracts with Altadis, Delphi and Fantini Sciantini. New product introductionscontributed to growth with fluid power up 80% and gearboxes and motors up 31.2%. Within Benelux, the Netherlands SPWD were up 19.6%, with good growth in allareas of the business. Tight cost control helped operating profit grow by 28.8%.In Belgium we are delighted to welcome Rudi Ramaekers and his team. Thecombination of Ramaekers and Brammer Belgium will produce the market leader inthe provision of bearings and power transmission products. In our DevelopingBusinesses, overall SPWD increased by 58.8%, and total revenues were £10.1million. In Austria, the integration of two companies under one management teamhas been achieved and significant operating improvements have resulted, withSPWD growth of 10.3%. In the Czech Republic our acquisition of MHBH is on plan.In Hungary, considerable progress has been made with new product introductionsand key accounts, resulting in SPWD growth of 83.8%. In our start-up in Italy wecontinued to develop our relationship with key accounts such as EatonCorporation, GKN and Smurfit. Strategy Growth • Overall SPWD growth was 7.2%, and accelerated through the half year,representing significant market share gains. • Key account sales grew by 10%. We expect the key account growth rateto accelerate in the second half. • We continued to evaluate bolt-on acquisition opportunities in each ofour businesses on the continent. Costs/Synergies • We continued to develop closer relationships with strategic suppliers,and increased concentration of spend with those suppliers, leading to both costbenefits and greater supplier marketing support in the field. • The development of the Brammer Brand continues. All our businesses arenow either using the 'linked Brand name' or have moved directly to the BrammerBrand. This development is on track for a complete make-over of the Group by 1January 2007. Capability • With more than 2000 people in over 265 locations in 11 countries ourcontinuing challenge is to create learning which is accessible and meaningful toall. We have revised our universally available Foundation Programme, ane-learning programme developed to inform all of our staff about Brammer and theproducts we provide to our customers. This is now available in seven languagesand over 80% of our people have completed this programme across the Group. • We have completed our newest programme in our Distributed Learning 'Brammer University' which will provide a "commercial complement" to theFoundation Programme. The aim of this programme - "The Business of Brammer" -is to enhance the commercial skills of our people - to help them to understandthe basics of the business. It includes modules on selling our products andservices, making our deals profitable, keeping our costs under control and thefundamentals of business finance. The future We have a strong presence within Europe upon which to build and anticipatefurther gains in market share in a fragmented market place. The trend forcustomers to seek a single European source of supply for our chosen productrange is increasing, and we continue investing to take advantage of this trend.The satisfactory cash flow generated by the business should continue for theforeseeable future. We aim to match our organic growth with an equal volume ofacquisitive growth and believe that we can achieve this level of growth frominternally generated cash flow. Ian Fraser5 September 2006 Brammer CONSOLIDATED INTERIM INCOME STATEMENT Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 All continuing operationsRevenue (note 2) 157,466 145,528 287,390Cost of sales (109,547) (100,903) (198,588) Gross profit 47,919 44,625 88,802 Distribution costs (40,605) (38,033) (76,260)Exceptional non cash pension curtailment (note 3) 2,811 - - Total distribution costs (37,794) (38,033) (76,260) Operating profit (note 2) 10,125 6,592 12,542 Finance expense (1,369) (1,422) (2,683)Finance income 13 96 225 Profit before tax 8,769 5,266 10,084 Taxation (2,720) (1,640) (2,535) Profit for the period attributable to equity shareholders 6,049 3,626 7,549 Earnings per share - total (note 4)Basic 12.6p 7.6p 15.8pDiluted 12.6p 7.6p 15.7p Earnings per share - on profit before exceptional non cashpension curtailment and related tax chargeBasic 8.5p 7.6p 15.8pDiluted 8.5p 7.6p 15.7p The notes on pages 12 to 19 form part of these accounts. Brammer CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the period 6,049 3,626 7,549 Net exchange differences on translating foreign operations 104 (365) (663)Actuarial gains/(losses) 8,858 1,520 (1,595)Tax on actuarial gains/losses (2,682) (456) 508 Net gains/(losses) not recognised in income statement 6,280 699 (1,750) Total recognised income and expense 12,329 4,325 5,799 The notes on pages 12 to 19 form part of these accounts. Brammer CONSOLIDATED INTERIM BALANCE SHEET 30 June 2006 30 June 2005 31 Dec 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000AssetsNon-current assetsGoodwill 43,673 35,890 39,009Intangible assets 3,683 1,301 2,559Property, plant and equipment 10,984 10,072 9,944Deferred tax assets 8,865 10,506 12,480 67,205 57,769 63,992 Current assetsInventories 44,773 41,811 44,341Trade and other receivables 60,541 59,150 51,175Cash and cash equivalents 9,956 8,171 9,445 115,270 109,132 104,961LiabilitiesCurrent liabilitiesFinancial liabilities - borrowings (12,287) (10,879) (10,991)Trade and other payables (68,173) (66,566) (61,639)Deferred consideration (358) (1,724) (375)Current tax liabilities (3,727) (3,318) (2,965) (84,545) (82,487) (75,970) Net current assets 30,725 26,645 28,991 Non-current liabilitiesFinancial liabilities - borrowings (50,559) (48,760) (49,106)Deferred tax liabilities (5,002) (4,114) (4,863)Provisions (2,290) (646) (1,979)Deferred consideration (6,362) (163) (2,241)Retirement benefit obligations (21,683) (30,809) (33,726) (85,896) (84,492) (91,915) Net assets / ( liabilities) 12,034 (78) 1,068 Shareholders' equityShare capital 9,573 9,573 9,573Share premium 3,552 3,552 3,552Translation reserve (437) (243) (541)Retained earnings (654) (12,960) (11,516) Total equity 12,034 (78) 1,068 The notes on pages 12 to 19 form part of these accounts. Brammer CONSOLIDATED INTERIM CASH FLOW STATEMENT Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Retained profit 6,049 3,626 7,549Tax charge 2,720 1,640 2,535Depreciation of tangible and intangible assets 1,390 1,210 2,437Share options - value of employee services 428 248 623(Gain)/loss on sale of property, plant and equipment (29) - 7Net financing expense 1,356 1,326 2,458 Movement in working capital (4,474) (4,078) 135Pension obligations (3,185) (60) (258) Cash generated from operating activities 4,255 3,912 15,486Interest received 22 97 208Interest paid (1,396) (950) (2,945)Tax paid (1,149) (594) (2,165) Net cash generated from operating activities 1,732 2,465 10,584 Cash flows from investing activitiesProceeds from disposal of subsidiaries (net of cash disposed 1,000 3,000 4,500of)Acquisition of subsidiaries (net of cash acquired) (1,947) - (1,986)Deferred consideration paid on prior acquisitions (154) (948) (2,674)Proceeds from sale of property, plant and equipment 79 17 225Purchase of property, plant and equipment (1,455) (833) (1,975)Purchase of software (709) (67) (987) Net cash (used in) / generated from investing activities (3,186) 1,169 (2,897) Cash flows from financing activitiesNew loans taken out/(repayment) of loans 2,051 (2,199) (4,104)Finance lease principal payments (16) (53) (73)Dividends paid to shareholders - - (2,323) Net cash generated from/(used in) financing activities 2,035 (2,252) (6,500) Net increase in cash and cash equivalents 581 1,382 1,187Exchange gains and losses on cash and cash equivalents 37 (1,015) (257)Cash and cash equivalents at beginning of period 8,734 7,804 7,804 Net cash at end of period 9,352 8,171 8,734 Cash and cash equivalents 9,956 8,171 9,445Overdrafts (604) - (711) Net cash at end of period 9,352 8,171 8,734 The notes on pages 12 to 19 form part of these accounts. Brammer ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these interimfinancial statements are included in the financial statements for the year ended31 December 2005. These policies have been consistently applied to all theperiods presented, unless otherwise stated. Basis of preparation The interim financial statements of Brammer PLC for the half year period ended30 June 2006 are unaudited and do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. This interim financial information for the half year ended 30 June 2006 has beenprepared in accordance with IAS 34, "Interim financial reporting". The interimcondensed financial report should be read in conjunction with the annualfinancial statements for the year ended 31 December 2005. The financial statements have been prepared under the historical costconvention. The group's stated accounting policies remain unchanged. Brammer NOTES TO THE ACCOUNTS 1 COMPARATIVE RESULTS Comparative figures for the year ended 31 December 2005 are taken from thecompany's statutory accounts which have been delivered to the Registrar ofCompanies with an unqualified audit report. Copies of the 2005 annual report andthe 2005 interim report are available on the company's web site(www.brammer.biz). 2 SEGMENTAL ANALYSIS Continuing operations Continuing operations represent the Brammer distribution business which is aseparately identifiable segment. The group is primarily controlled on a countryby country basis in line with legal structure of the group. Segment assetsinclude property, plant and equipment, intangible assets, inventories, and tradeand other receivables. Segment liabilities comprise trade and other payables,and provisions. All inter-segmental trading is at an arms-length basis. UK France Germany Spain Benelux Other Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Six months ended 30 June2006RevenueSales to external customers 54,123 27,279 41,835 14,953 12,170 7,106 157,466Inter company sales 120 132 556 174 3,130 (4,112) - Total 54,243 27,411 42,391 15,127 15,300 2,994 157,466 Operating profit beforeexceptional non cashpension curtailment 893 1,100 2,859 1,462 1,145 (145) 7,314 Exceptional non cashpension curtailment 2,811 2,811 Total operating profit 893 1,100 2,859 1,462 1,145 2,666 10,125 Finance expense (1,369)Finance income 13 Profit before tax 8,769Tax (2,720) Profit for the year 6,049 Segment assets 36,398 24,012 22,544 14,118 15,213 7,696 119,981Goodwill - 2,229 27,998 1,295 8,922 3,229 43,673 36,398 26,241 50,542 15,413 24,135 10,925 163,654Cash 9,956Deferred tax 8,865 Total assets 182,475 Segment liabilities (23,006) (15,005) (8,680) (11,052) (7,335) (3,655) (68,733)Current tax (3,727)Deferred tax (5,002)Dividends (1,730)Deferred consideration (6,720)Financial liabilities (62,846)Retirement benefit (21,683)obligations Total liabilities (170,441) Net assets 12,034 Other segment itemsCapital expenditure 589 65 68 147 128 1,167 2,164Depreciation and (559) (109) (179) (99) (107) (337) (1,390)amortisation UK France Germany Spain Benelux Other Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Six months ended 30 June2005RevenueSales to external customers 52,285 27,161 38,501 13,981 10,292 3,308 145,528Inter company sales 188 162 594 184 799 (1,927) - Total 52,473 27,323 39,095 14,165 11,091 1,381 145,528 Operating profit 839 1,169 2,500 1,321 865 (102) 6,592Finance expense (1,422)Finance income 96 Profit before tax 5,266Tax (1,640) Profit for the year 3,626 Segment assets 35,626 24,693 21,829 14,767 11,525 3,894 112,334Goodwill - 2,177 27,357 1,581 3,846 929 35,890 35,626 26,870 49,186 16,348 15,371 4,823 148,224Cash 8,171Deferred tax 10,506 Total assets 166,901 Segment liabilities (24,608) (13,021) (10,005) (10,133) (4,637) (3,228) (65,632)Current tax (3,318)Deferred tax (4,114)Dividends (1,580)Deferred consideration (1,887)Financial liabilities (59,639)Retirement benefit (30,809)obligations Total liabilities (166,979) Net liabilities (78) Other segment itemsCapital expenditure 416 70 62 183 36 133 900Depreciation and (591) (145) (123) (96) (71) (184) (1,210)amortisation 3 EXCEPTIONAL NON CASH PENSION CURTAILMENT The exceptional non cash pension curtailment comprises the curtailment gain of£2,811,000 which reflects the impact of closing the defined benefit section ofthe Brammer Services Limited Retirement Benefits Scheme to future accrual. Asstated in the 2005 annual report this defined benefit section was closed tofuture accrual with effect from 1 March 2006.This curtailment gain has been calculated by an independent actuary, KPMG LLP. 4 EARNINGS PER SHARE Half year 2006 Earnings per share Earnings Basic Diluted £'000Weighted average number of shares in issue ('000) 47,865 48,182 Total - all continuing operationsProfit for the period 6,049 12.6p 12.6pExceptional non cash pension curtailment (2,811)Tax on exceptional non cash pension curtailment 843 Earnings before exceptional non cash pension curtailment and related tax 4,081 8.5p 8.5p Half year 2005 Earnings per share Earnings Basic Diluted £'000Weighted average number of shares in issue ('000) 47,865 47,985 Total - all continuing operationsProfit for the period 3,626 7.6p 7.6p Earnings 3,626 7.6p 7.6p Full year 2005 Earnings per share Earnings Basic Diluted £'000Weighted average number of shares in issue ('000) 47,865 48,083 Total - all continuing operationsProfit for the financial year 7,549 15.8p 15.7p Earnings 7,549 15.8p 15.7p 5 PENSIONS The valuations used for IAS 19 disclosures have been based on the most recent actuarial valuation at 1January 2003 updated by KPMG LLP to take account of the requirements of IAS 19 in order to assess theliabilities of each of the schemes at 30 June 2006. Assets are stated at their market value at 30 June2006. The financial assumptions used to calculate the liabilitiesunder IAS 19 are UK Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005Inflation rate 2.90% 2.80% 2.90%Rate of increase in salaries * 2.90% 4.30% 4.15%Rate of increase of pensions in payment 2.90% 2.80% 2.90%Rate of increase for deferred pensioners 2.90% 2.80% 2.90%Discount rate 5.40% 5.30% 4.85%* limited to inflation increase only following curtailment. Netherlands Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005Inflation rate 2.00% 2.00% 2.00%Rate of increase in salaries 3.00% 3.00% 3.00%Rate of increase of pensions in payment 2.00% 2.00% 2.00%Rate of increase for deferred pensioners 2.00% 2.00% 2.00%Discount rate 4.80% 4.75% 4.00% The amounts recognised in the balance sheet are determined asfollows: 30 June 2006 30 June 2005 31 Dec 2005 £m £m £mPresent value of defined benefit obligations 92.1 90.6 103.5Fair value of plan assets (70.4) (59.8) (69.8) Net liability recognised in the balance sheet 21.7 30.8 33.7 The amounts recognised in the income statement are as follows Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 £m £m £mCurrent service cost 0.4 0.9 1.6Interest cost 2.4 2.3 4.7Expected return on plan assets (2.2) (2.0) (4.1) On-going pension expense included within distribution costs 0.6 1.2 2.2Curtailment gain shown as exceptional non cash pension (2.8) - -curtailment Total pension (income)/expense (2.2) 1.2 2.2 Analysis of the movement in the balance sheet net liability Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 £m £m £mOpening 33.7 32.4 32.4Exchange adjustments - (0.1) (0.1)On-going expense as above 0.6 1.2 2.2Employer contributions (1.0) (1.2) (2.4)Actuarial (gain)/loss recognised in the 'SORIE' (8.8) (1.5) 1.6Curtailment gain as above (2.8) - - Closing 21.7 30.8 33.7The on-going pension expense has been included in distribution costs. The actual return on plan assets was£0.2m (2005: £4.1m) 6 CLOSING NET DEBT At 30 June 2006 At 30 June At 31 Dec 2005 2005 £'000 £'000 £'000 Borrowings - current (12,287) (10,879) (10,991)Borrowings - non-current (50,559) (48,760) (49,106)Cash and cash equivalents 9,956 8,171 9,445 Closing net debt (52,890) (51,468) (50,652) Reconciliation of net cash flow to movement in net debt Six months to Six months to Year to 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000 Net increase in cash 581 1,382 1,187Debt and leases (2,035) 2,252 4,177 (1,454) 3,634 5,364Loans acquired (509) - (310)Exchange (275) 1,939 1,335Net cash movement (2,238) 5,573 6,389Opening net debt (50,652) (57,041) (57,041)Closing net debt (52,890) (51,468) (50,652) 7 CHANGES IN SHAREHOLDERS' EQUITY Share Share Treasury Translation Retained capital premium shares reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000For the period ended 30 June 2006At 1 January 9,573 3,552 (958) (541) (10,558) 1,068Profit for the year attributableto equity shareholders - - - - 6,049 6,049Unrealised exchange movement - - - 104 - 104Transfer on vesting of own shares - - 443 - (443) -Tax on own shares vesting - - - - (179) (179)Share options - Value of employee - - - - 428 428servicesTax on share options - - - - 118 118Dividends - - - - (1,730) (1,730) Actuarial gains on pensions - - - - 8,858 8,858schemes Tax on actuarial gains on pensions - - - - (2,682) (2,682)schemesMovement in period - - 443 104 10,419 10,966At 30 June 9,573 3,552 (515) (437) (139) 12,034 For the period ended 30 June 2005At 1 January 9,573 3,552 (958) 122 (15,360) (3,071)Profit for the year attributableto equity shareholders - - - - 3,626 3,626Unrealised exchange movement - - - (365) - (365)Share options - Value of employee - - - - 248 248servicesDividends - - - - (1,580) (1,580) Actuarial gains on pensions - - - - 1,520 1,520schemes Tax on actuarial gains on pensions - - - - (456) (456)schemesMovement in period - - - (365) 3,358 2,993At 30 June 9,573 3,552 (958) (243) (12,002) (78) For the year ended 31 December2005At 1 January 9,573 3,552 (958) 122 (15,360) (3,071)Profit for the year attributableto equity shareholders - - - - 7,549 7,549Unrealised exchange movement - - - (663) - (663)Share options - Value of employee - - - - 623 623servicesTax on share options - - - - 40 40Dividends - - - - (2,323) (2,323) Actuarial losses on pensions - - - - (1,595) (1,595)schemes Tax on actuarial losses on - - - - 508 508pensions schemesMovement in period - - - (663) 4,802 4,139At 31 December 9,573 3,552 (958) (541) (10,558) 1,068 Retained earnings as disclosed in the Balance Sheet page 10 represent theretained earnings and treasury share balances above. 8 ACQUISITIONS The group purchased 51% of Aandrijvingen Ramaekers NV on 20 June 2006 for aconsideration of £1.7 million in cash. The second stage will be the purchase, by2012 of the remaining 49% for a consideration in the range £1.7 million to £4.1million. The acquisition has been accounted for as a single transaction as, under theterms of the sale and purchase agreement, the group is entitled to the fulleconomic benefits associated with 100% ownership of the business. As the date of acquisition was just prior to the half year end no amounts havebeen included in the income statement in respect of the acquired business, asthey are not considered to be material in relation to the group as a whole, andthe assets acquired are included at their carrying value because provisionalfair values have not yet been determined. The residual excess over the net assets acquired is recognised as goodwill inthe financial statements. Carrying values pre acquisition £'000Property, plant and equipment 735Inventories 1,114Receivables 1,944Payables (2,068)Taxation - current (148)Cash and cash equivalents 164Loans (509) Total 1,232 Net assets acquired 1,232Goodwill 4,871Maximum consideration to be wholly satisfied in cash 6,103 The outflow of cash and cash equivalents on the acquisition of Ramaekers iscalculated as follows: £'000Cash consideration 1,728Expenses and related costs 204Cash acquired (164) Total 1,768 The results of operations for the group, as if the above acquisition had beenmade at the beginning of the year are as follows: £'000Revenue 161,229Profit after tax 6,038 This information is not necessarily indicative of the results of operations thatwould have occurred had the purchase been made at the beginning of the periodpresented or the future results of the combined operations. On 29 May 2006 the group acquired the net assets and trading business of KSCsapagy Kft., a business based in Hungary, for €201,000 and immediately mergedthis business into the existing Brammer operation in Hungary. A further review of the fair value adjustments in respect of the acquisition ofMHBH has been carried out during the first half of the year. As a result of thisreview adjustments have been made to reclassify from goodwill the separatelyidentifiable intangible assets which amounted to £667,000 together with arelated deferred tax liability of £160,000. An amortisation charge of £86,000 inrespect of these intangible assets has been reflected in the income statementfor the half year. A final review of the fair value adjustments will be undertaken and any furtherchanges will be reflected in the 2006 annual report. 9 BASIS OF ACCOUNTING The interim financial statements have been prepared on the basis of theaccounting policies set out above. The interim financial statements wereapproved on 5 September 2006 by a duly appointed and authorised committee of theboard and are not audited by the auditors. 10 INTERIM ANNOUNCEMENT A copy of the interim announcement is available for inspection at the registeredoffice of the company, Claverton Court, Claverton Road, Wythenshawe, Manchester,M23 9NE and the offices of Citigate Dewe Rogerson Ltd, 3 London Wall Buildings,London Wall, London EC2M 5SY, and will be posted to shareholders. 11 INTERIM DIVIDEND Relevant dates concerning the payment of the interim dividend are Record date 6 October 2006 Payment date 3 November 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BRAM.L