2013 Preliminary Results For the year ended 31 December 2013 Continued progress in difficult markets Delivered £60 million of validated cost savings to our customers
Agenda • Overview • Financial highlights • Market drivers • Growth Strategy – Key Accounts – Insites TM – Product range extension – Market segmentation • Current trading and outlook 2
Overview • Group revenue up 1.9% to £651.9 million with an improving trend • Gross margin up 100 basis points to 31.5% • Profit before tax up 4.4% to £35.4 million • Strong operating cash generation of £45.5 million • $100 million of additional long term funding • Organic growth strategy delivering market share gains • Acquisition of Lönne Holding AS post year end • Full year dividend up 8.5% 3
Customer validated cost savings Over 6,380 separate cost savings provided to our customers in 2013 60.0 51.5 34.9 30.0 25.8 15.1 15.0 8.8 2.6 0.4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4 £m
Brammer well positioned to outperform market • Growth rates are improving in most key Business area at 2013 constant currency rates ( € 1.25:£1) segments Q1 Q2 Q3 Q4 FY • Growth rates (%) £m Group SPWD growth in Q4 - 6.0 ppt SPWD improved over Q1 -2.5 -0.9 Total group -0.6 3.5 633.3 • Bearing sales decline has bottomed out Revenue with growth of 2.6% in Q4 Bearings -14.0 -7.8 -4.6 2.6 148.5 • Non-bearing sales growth continues to -2.4 4.1 Non-bearings 3.6 2.3 484.8 accelerate Tools & General 1.4 8.6 3.7 14.9 167.5 Maintenance • T&GM grew 7.1% Key Accounts 1.9 11.3 8.9 12.9 345.5 • Key Accounts growth accelerated to -12.7 -8.9 Base business -5.6 -9.6 287.8 12.9% in Q4 • Continuing market uncertainty 5
Financial highlights
Highlights Total sales Operating profit Working capital days 652 640 75.3 39.8 37.3 31.8 69.5 572 65.4 2011 2012 2013 2011 2012 2013 2011 2012 2013 2012 2013 Statutory 1.9% Statutory 6.7% Receivables 52.9 50.4 Constant currency -0.2% Constant currency 1.3% Inventories 83.0 85.0 FX 2.1% FX 5.4% Payables (60.6) (65.9) Total 75.3 69.5 Operating margin Earnings Dividend EPS +2.8% DPS +8.5% 22.1 21.5 6.1% 10.2 9.4 5.8% 8.4 19.8 5.6% 2011 2012 2013 2011 2012 2013 2011 2012 2013 Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items. Prior periods’ results are restated to reflect retrospective application of IAS19R - Revised
Profit & Loss 2012 IAS 19R 2012 2013 2013 2012 2013FX Change Change Reported Restatement Reported Turnover Turnover 639.6 1.9% - 639.6 1.9% 651.9 651.9 653.5 13.9 Gross margin Gross margin 205.3 205.3 199.5 194.8 4.7 - - 194.8 - Gross % Gross % 31.5% 31.5% 30.5% 30.5% - - - 30.5% - Sales, Distribution and Sales, Distribution and (165.5) (165.5) (161.4) (157.6) (3.9) - 0.1 (157.6) - Administrative Costs Administrative Costs Underlying operating profit Underlying operating profit 37.2 7.0% 0.1 37.2 7.0% 39.8 39.8 38.1 0.8 % % 5.8% - - 5.8% - 6.1% 6.1% 5.8% - Interest Interest (2.7) - (0.7) (2.7) - (4.4) (4.4) (3.6) (0.2) Underlying profit after Underlying profit after 34.5 2.6% 35.4 35.4 34.5 0.6 (0.6) 34.5 2.6% interest interest £m Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items. Prior periods’ results are restated to reflect retrospective application of IAS19R - Revised
Ratios 2012 IAS 19R 2012 2013 2012 Change 2013FX Change 2013 Reported Restatement Reported Turnover 651.9 639.6 653.5 1.9% 13.9 - 639.6 1.9% Turnover 651.9 Underlying operating profit 39.8 37.2 38.1 7.0% 0.1 37.2 7.0% Underlying operating profit 39.8 0.8 5.8% - Return on Sales Return on Sales 6.1% 6.1% 5.8% - - 5.8% - Closing operating capital^ Closing operating capital^ 215.1 215.1 208.6 211.8 3.2 - - 208.6 - Return on operating capital Return on operating capital 34.8% 34.3% 34.6% - - - 34.3% - 34.7% employed** employed** 17.8% - Return on investment*** Return on investment*** 18.5% 18.5% 18.0% - - 17.8% - ^Segmental assets including goodwill less liabilities, before current and deferred tax, dividends, cash, loans, deferred consideration & pension liability at constant currency **Underlying operating profit as a percentage of operating capital as defined in ^ but excluding goodwill and acquired intangibles ***Underlying operating profit as a percentage of operating capital as defined in ^
Sales* contribution by growth driver - FY 800 750 700 21.6 650 19.0 Market Insites TM segmentation 28.1 (70.1) & Product 600 Eliminations + Key extension Accounts & Base business 634.7 decline 550 633.3 Base business (29.4) Eliminations (40.7) 500 2012 2013 *At constant currency – management rates € 1.25: £1 10 + Eliminating sales included in more than one category
Sales* contribution by growth driver – H2 390 370 350 16.9 330 (40.9) 12.8 Market 310 Insites TM segmentation Eliminations + 17.3 & Product & Base extension 290 Key business Accounts decline 308.5 314.6 270 Base business (11.2) Eliminations (29.7) 250 H2 2012 H2 2013 *At constant currency – management rates € 1.25: £1 11 + Eliminating sales included in more than one category
Capital expenditure • Infrastructure investment in two new distribution centres • Continued IT investment delivering enhanced data management and trading platforms • Continued investment in growth drivers Land & Intangible Equipment Total Buildings assets New National Distribution centres 1.7 - - 1.7 Alcoa Insites TM - - 0.4 0.4 Tools & General Maintenance Division - 1.7 2.3 4.0 Information Technology - 0.6 4.0 4.6 Vehicles - 0.6 - 0.6 Branch investment and other 0.9 1.5 - 2.4 Total 2.6 4.4 6.7 13.7 12 £m
Cash generation 60 50 2.7 (2.9) 40 Share option Exceptional and charges 6.1 acquisition (9.7) (2.1) 11.6 Depreciation Inventories Payables Receivables 30 and amortisation 20 10 0 39.8 45.5 Operating profit Operating Cash Flow (before amortisation, acquisition costs and exceptionals) 13 £m
Movement in net debt Movement in net debt Opening (53.8) Exchange (0.7) Movement 1.6) Closing (52.9) (13.5) Capital (4.9) expenditure (net) Interest and pension funding (7.5) (2.3) Tax Purchase of (4.2) own shares (net) Acquisitions (11.5) 45.5 1.6 Dividends Operating Net cash Cash Flow inflow 14 £m
Growth strategy
Growth Strategy Growth Capability Costs Synergies Geographical development Business Skills Key Accounts development European Buying Systems Integration Development Distributed Learning IT and Other Cost Insites TM expansion Brand Development Programme Development Reductions Capital Employed Supplier Relationship Internal Communications Product range extension and Involvement Management Management Country organic growth People Development Supplier Rationalisation Business Best Practice MPT Fluid Power Bearings Tools & General c.10% share of 3% share of 1% share of Maintenance € 2bn market € 5 bn market € 10 bn market 1% share of € 50 bn market 16
Key Accounts Update Case study • Key Accounts SPWD grew by 8.7% • Brammer was awarded an External • Now represents 54.6% of group sales Business Partner Excellence • SPWD growth rates accelerating from Award/Excellence Award from P&G 1.9% in Q1 • Recognition for going above and • 12 new pan-European contracts won beyond in 2013 • Strong growth in defensive segments • Brammer was among the 80 carefully – up 12.0% selected external parties • Pipeline is at record levels • Brammer saved P&G £0.7m over 12 months 17 * Sales per working day
Key Accounts Key Account Sales Performance Multi-site Status Scope Sales Growth € 118.4m Tier 1 EU contract Part EU Group 15.5% € 136.9m € 152.7m Tier 2 National contract Part EU Group 7.5% € 164.1m € 41.6m Tier 3 No contract Part EU Group 4.6% € 43.5m € 84.2m Tier 4 National contract National Group 3.9% € 87.5m € 396.9m 8.7% € 432.0m 18
Pan-European Supply Agreements Experience at scale 60 100 • More than 500 people serving 60 Pan-EU Key Accounts • Key Account support provided in 16 countries • 14 Key Accounts are in the Global Fortune 500 list 40 80 No. of key Accounts EU KA Revenues (M € ) 30 60 20 40 10 20 0 0 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Key Milestones & Investments First ever EKAM Investment in Central support KA Tools Sector Focus on Account Major Employed European KA team established Management resilient Development Investments in Team established established sectors Managers KA infrastructure 19
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