Half-year Results

Performance

The global economy remains turbulent as a result of unresolved issues in the Middle East and the stop-start nature of the US-Iranian conflict. Given this backdrop, the directors are delighted to announce that turnover increased to £26.9m as compared to £26.4m achieved in the first half of 2025. The first quarter of the year saw a slow start for our North American and Australian operations and Group results were buoyed up by stronger than expected sales out of Europe and Africa. In the second quarter of the year, our North American operations saw a recovery in sales however performance in the Asia region remained mixed.

The 2026 results include three months of the Group’s new business acquisition, Don Electronics Limited (“Don”) and its trading subsidiary, Synatel Instrumentation Limited (“Synatel”). As reported in the 2025 Annual Report, the rationale for the acquisition was to strategically secure our key electronics supply chain as this opens up future opportunities in product development for our range of sensors and monitoring solutions. Consequently, we expected the acquisition would enhance our margin but would not significantly increase sales in the short term. We are pleased with the integration progress we have made during the first three months.

Group operating profit increased to £2.4m compared to £2.2m in the corresponding period and profit before tax was £2.0m broadly unchanged from the first half of 2025. This includes £300,000 of advisory and legal fees, and stamp duty relating to the acquisition.

Overall, the directors remain positive that despite the economic uncertainties, the Group’s 4B brand remains a strong differentiator in the market and the global nature of its operations means that the Group is to some degree naturally sheltered from massive fluctuations.

Dividends

The Group’s policy is to balance dividend growth alongside the Group’s requirement for investment in capital, in order to support long-term growth of the business. Taking careful consideration of this and the current economic uncertainties, the directors have decided to maintain the interim dividend at 6.0p per share, the same level as the interim dividend paid in October 2025. This dividend will be paid on 16th October 2026 to the Ordinary and ‘A’ Ordinary shareholders on the register on 2nd October 2026. The associated ex-dividend date is 1st October 2026.

Braime Pressings Limited

External sales revenue of £2.8m in the first six months of 2026 decreased by £244,000 on the same period last year due to reduced volumes from a key customer in the automotive sector. Intercompany sales were slightly up by £77,000 to £2.2m. The manufacturing division made a profit after tax of £303,000 in the six-month period to June 2026, up £70,000 compared to the same period last year. The business continues to look into operational efficiencies to reduce costs. The business has hedged its energy costs with a forward contract and is benefiting from the additional solar PV system installed at the end of 2025. Braime Pressings’ results have historically been dependent on the performance of the UK automotive sector and it remains management’s focus to grow sales in other areas such as construction and telecoms to mitigate this inherent risk to its income stream.

4B Division

Our distribution division’s external sales revenue of £24.1m increased by £727,000 or 3% when compared to the same period last year and up 10% when compared to the second half of 2025. Intercompany trading was £6.9m, up 38% from the corresponding period last year due in part to inclusion of trading with the newly acquired businesses. Profit for the period has doubled to £1.9m when compared to the first half of 2025 and up by £689,000 or 57% when compared to the second half of 2025 reflecting the flow-through of additional sales, as well as margin now being retained from the acquisition of Don and Synatel in March 2026. The division’s reported results were adversely affected by the weaker USD which averaged 1.345 to Sterling, when compared to 1.308 to Sterling for the first half of 2025.

The business is now operating under the new US tariffs which have added 10% to US imports. The bigger uncertainty now lies in the future inflationary effects of the Middle East war, particularly in certain commodities such as plastic resin as the global supply chain becomes erratic. Despite a challenging backdrop, the division is continuing its efforts to grow its new subsidiaries in Indonesia and Canada; these territories are strategic as they represent significant grain materials-handling areas on the global map.

Acquisition of Don and Synatel

As reported in the 2025 annual report, on 31st March 2026, the Group completed the acquisition of Don and Synatel for a total fair value consideration of £11.5m. This included an estimated deferred contingent consideration, dependent on achieving certain profits against an agreed target, which was discounted down to a net present value of £1.6m using a discount rate of 6.25% based on prevailing borrowing rates. The directors have reappraised the discount rate to 12.0%, using benchmarked internal rates of return, thus taking the net present value of the deferred contingent consideration to £1.3m and the fair value of the total consideration to £11.2m. The undiscounted total consideration, as reported in the 2025 annual report remains unchanged at £13.1m. As the deferred contingent consideration is an estimate based on future profit, this will be reviewed annually.

Intangible assets acquired (primarily technical know-how) were independently valued at £4.6m and a notional deferred tax provision of £1.2m has been raised against this. Other net assets acquired were £5.5m primarily made up of £3.9m of inventories, £465,000 of fixed assets and £1.6m of accounts receivables, less £494,000 of trade payables. The goodwill arising from the acquisition is £2.3m. The net cash outflow from the acquisition was £4.2m made up of £5.0m initial cash settlement on completion less £833,000 cash retained in the business to meet agreed liabilities and an agreed net working capital target.

As previously reported, the transaction was funded by a £5.2m bank loan payable at 2.6% above BoE base rate, with the balance of payments owing to the vendors being deferred. The £4.9m deferred consideration attracts an interest rate of 3% above BoE base rate and is being settled over three years by annual payments of £750,000 with the final balance due six months following the third anniversary of completion. The contingent consideration, which is based on performance against an agreed profit target, becomes payable in the fourth, fifth and sixth year following completion and does not attract interest. Acquisition-related costs made up of stamp duty of £50,000 and £250,000 of legal and advisory fees are included in this half-year’s results.

Balance Sheet

Net assets of the Group as at 30th June 2026 amounted to £26.4m (30th June 2025 - £23.3m). As mentioned above, as well as goodwill and intangibles, the acquisition introduced £5.5m of net assets into the Group primarily in the form of stock valued at £3.9m. Fixed asset additions (excluding those acquired on completion of the acquisition) amounted to £703,000 and these include £118,000 of new vehicles and £314,000 of new press and plant and machinery replacements in Braime Pressings and new tools and silos in the 4B division. Inventories were £19.2m up £4.3m on prior year, primarily reflecting the additional stock from Don and Synatel. Trade receivables have increased by £1.5m, reflecting the increase in activity towards the end of the second quarter of 2026. Financial liabilities have increased to £19.9m compared to £5.3m, as at the end of June 2025. These reflect, amongst other items, the £5.2m acquisition loan, the £2.0m oilcan roof loan facility, £6.2m deferred and contingent consideration owing to the vendors of Don and Synatel, and £2.2m of capitalised operating lease costs, £1.6m of which have been introduced from the acquisition. All lease liabilities have a corresponding RoU (right of use) asset.

Cash flow

The net cash position of the Group at the end of June 2026 was £2.9m, compared to £562,000 as at 30th June 2025 and £2.6m as at 31st December 2025. Cash generated from operations after working capital movements was £1.1m compared to £865,000 for the corresponding period in 2025. Investing outflows during the period were £4.2m for the acquisition and £703,000 for new plant, machinery and vehicles. During the period the Group repaid £547,000 of borrowings and lease liabilities and drew down £5.4m of new loans (£5.2m to fund the acquisition and £155,000 for the balance of the oilcan roof facility). Overall, net cash increased by £363,000 during the first six months of the year. The business continues to enjoy good headroom within its £3.5m bank overdraft facility. Following the acquisition, inventory balances have increased and management remains focused on ensuring that working capital requirements, particularly for stock and debtors, remain carefully monitored and controlled whilst balancing the cost of any stock-outs.

Principal exchange rates

The Group reports its results in Sterling, its presentational currency. The Group operates in nine other currencies and the average of the principal exchange rates in use during the half year and the closing rates as at 30th June 2026 are shown in the table below, along with comparatives. A significant proportion of the Group revenues are derived in the USA and currency fluctuations impact the results accordingly. The total positive impact of foreign currency translations on cashflow was £270,000 compared to a negative impact of £947,000 in the 2025 interim period.

The total gain on translation of overseas assets amounted to £248,000 for the six-month period as compared to the loss of £930,000 for the 2025 interim period. This is shown in the consolidated statement of comprehensive income table below.

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:

Notes to KPI’s

Turnover growth

The Group aims to increase shareholder value by measuring the year-on-year growth in Group revenue. We are pleased that despite the difficult trading conditions created by the Middle East conflict a small increase in sales has been achieved for 2026.

Gross margin

Gross profit (revenue less change in inventories and raw materials used) as a percentage of revenue is monitored to maximise profits available for reinvestment and distribution to shareholders. As expected gross margin has improved to 52.8%. This is the result of retaining profit within the Group following the acquisition of its key electronics suppliers. The directors continue to monitor the margins carefully for further movement particularly in the light of continuing uncertainty over US tariff agreements.

Operating profit

Sustainable growth in operating profit is a strategic priority to enable ongoing investment and increase shareholder value. Operating profits increased compared to the same period last year from a combination of increased sales and the retention of margin within the 4B Group as a result of the acquisition.

Stock days

The value of period-end 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 increased from the level as at June 2025 due to the recent acquisition, adding £3.9m to inventories. The Group continues to balance the cost of working capital against the opportunity cost of lost revenues should stock be unavailable.

Debtor days

The value of period-end trade receivables divided by revenue expressed as a number of days. This is an important indicator of working capital requirements. Debtor days at 58 days are higher than the equivalent figure of 55 days as at June 2025 and the figure of 51 days at December 2025 due to certain key accounts requiring terms above 60 days. Management remain focused on reducing this to improve cash.

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.

Employees

We are delighted to welcome our new employees from Don and Synatel and we continue to be grateful for the commitment shown by all our employees in the Group. We now operate twelve sites across the globe and regardless of location, all our employees contribute to the success of our Group and we thank them for their efforts and dedication during what continues to be challenging times.

Outlook for the second half of 2026

After the first six months of trading in 2026, our results are much better than might have been first envisaged, however our current outlook remains largely unchanged from that in the Chairman’s statement included in our 2025 annual report and as presented to shareholders at our AGM in June. The global economy remains very subdued and unstable, due to the current world geo-politics and ongoing disruption caused by the continuing conflict in the Gulf. The uncertainties created by conflicts between global competitors as well as former trading “partners” continue to affect global trade negatively and lead to delays in business investment. Given the imminent mid-term elections in the USA, our largest trading bloc, in our experience, the uncertainty and consequent delays in releasing investment in the USA is likely to continue throughout the rest of 2026.

This postponement of major investment projects, (delays fortunately, rather than outright cancellation) to update or add new facilities in the material handling of granular products, puts a limiting factor on the volume sales of our products and is thus likely, in the short-term, to limit our immediate potential growth.

Thankfully we have always enjoyed a strong “spares” market for ongoing maintenance. The size of this spares market has continued to grow alongside our recent sales growth, particularly in our larger and longer established markets. We also continue to enjoy growth of sales of the new innovative products we have recently brought to market.

Nevertheless, in the short term, our overall global sales growth, is likely to slow compared to our more recent experience. Our decision to set ourselves up locally in carefully selected new markets is heavily dependent on our expectations of “tapping into” local future investment in new material handling projects, in the storage, handling and the processing of granular material, in both the food chain and construction sectors.

We are pleased that our interim results are significantly better than we had initially feared. Even if the current year does not provide the same level of growth seen in previous years, we remain very confident that we have been investing appropriately in both our products and in potential growth markets – including securing and absorbing the future benefits of our own supply line – and that we will again return strong growth when business confidence returns.

Items that will not be reclassified subsequently to profit or loss

Items that may be reclassified subsequently to profit or loss

The foreign currency movements arise on the re-translation of overseas subsidiaries’ opening balance sheets at closing rates.

Accounting policies

Basis of preparation

The interim financial report has been prepared using accounting policies that are consistent with those used in the preparation of the full financial statements to 31st December 2025 and those which management expects to apply in the Group’s full financial statements to 31st December 2026.

This interim financial report is unaudited. The comparative financial information set out in this interim financial report does not constitute the Group’s statutory accounts for the period ended 31st December 2025 but is derived from the accounts. Statutory accounts for the period ended 31st December 2025 have been delivered to the Registrar of Companies. The auditors have reported on those accounts. Their audit report was unqualified and did not contain any statements under Section 498 of the Companies Act 2006.

The Group’s condensed interim financial information has been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted for the use in the UK and in accordance with IAS 34 ‘Interim Financial Reporting’ and the accounting policies included in the Annual Report for the year ended 31st December 2025, which have been applied consistently throughout the current and preceding periods.

The Group has adopted the following new or amended standards as of 1st January 2026 and beyond:

New and amended standards adopted by the Group:

Amendments to IFRS 9 and IFRS 7 – Amendments to the Classification and Measurement of Financial Instruments - Clarifies how contractual cash flows on financial assets with environmental, social and governance (ESG) and similar features should be assessed when determining if they are consistent with a basic lending arrangement and, hence, whether they are measured at amortised cost or fair value. Clarifies the date on which a financial asset or financial liability can be derecognised when settlement is via an electronic cash transfer. Requires additional disclosures for certain equity investments and financial investments with contingent features – effective accounting periods beginning on or after 1st January 2026.

Annual Improvements to IFRS Accounting Standards – Volume 11 - Minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements and IAS 7. Statement of Cash Flows – effective accounting periods beginning on or after 1st January 2026.

Amendments to IFRS 9 and IFRS 7 – Contracts Referencing Nature-dependent Electricity – Clarifies how the own-use exemption is applied to contracts referencing nature-dependent electricity, including requiring assessment of whether an entity has been, and expects to be, a “net purchaser” of electricity for the period of the contract. Permits hedge accounting for contracts referencing nature-dependent electricity if certain conditions are met. Introduces additional disclosures relating to contracts for which the above amendments change the accounting ie, contracts referencing nature-dependent electricity to which the own-use exemption, or hedge accounting, is applied – effective accounting periods beginning on or after 1st January 2026.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1st January 2026 and not early adopted:

IFRS 18 Presentation and Disclosure in Financial Statements - Introduces new requirements for classification of income and expenses in specified categories and presentation of defined subtotals in the statement of profit or loss, enhanced guidance and requirements for more useful aggregation and disaggregation of information in the primary financial statements and in the notes; and additional disclosures about management-defined performance measures related to the statement of profit or loss. Supersedes IAS 1 Presentation of Financial Statements – effective accounting periods beginning on or after 1st January 2027.

IFRS 19 Subsidiaries without Public Accountability: Disclosures - Permits eligible subsidiaries to use IFRS Accounting Standards with reduced disclosure requirements in their consolidated, separate or individual financial statements - effective accounting periods beginning on or after 1st January 2027.

IAS 21 The Effects of Changes in Foreign Exchange Rates

IAS 28 Investments in Associates and Joint Ventures

IFRS 20 Regulatory Assets and Regulatory Liabilities

The application and interpretations surrounding the new or amended standards is not expected to have a material impact on the Group’s reported financial performance or position. However, they may give rise to additional disclosures being made in the financial statements.

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 (2025 – 1,440,000). There are no potentially dilutive shares in issue.

6 months to 30th June 2026

£’000

Dividends paid on equity shares

Ordinary shares