Brammer InvendTM

> Convenience & simplicity

> Reduce consumption

> Lower inventory costs

> Improve productivity

28th July 2015

Agenda

• What is Invend™?

• Benefits for Brammer’s customers

• Benefits for Brammer

• Progress to date

• Brammer Invend™ for Key Accounts

• Brammer Invend™ Infrastructure

• Financial model

• Brammer’s competitive advantage

2

What is Invend™?

What is Brammer Invend™?

A fully managed industrial vending service that reduces consumption of fast

moving industrial products, lowers inventory costs & improves productivity

Fully managed service:

We handle everything

from installation to re-

stocking

No up-front investment:

No need for the customer

to invest in machines &

software, he only pays for

the products used plus a

monthly software/data

management fee

Easy installation and

operation:

All the customer needs to

get started is an internet

connection and power

supply

Provides control over

usage and access:

Gives the customer real-

time visibility and control of

end user and cost centre

usage

4

We help the customer select the right lines from our

Invend™ product range and agree stock levels

We configure the machine to suit the chosen products

We deliver and install the machine

How It Works: Machine set-up and installation

01

02

03We show the customer how to set-up and manage end

users04

We help the customer to

select product lines & agree

stock levels then manage

machine delivery, installation

& training

5

End users enter their unique code using a keypad or

scanning a barcode label – if authorised, the required

product is dispensed

An automated process means we know when the stock

in the machine is running low

Our local branch restocks the machine & invoices for

the items the customer has used

How It Works: Restocking and reporting

01

02

03Invend™ provides the customer with a range of reports

to keep him in control of usage04

End users have convenient

and controlled access to

products whilst an

automated process allows

us to replenish items when

required

6

Brammer Invend™: Product choice

Invend™ can stock a broad range of fast moving industrial consumables:

over 30,000 certified vendable products

01

05

02

06

03

07

04

08

7

Invend™ Machine Overview

InvendTM Coil

Ideal for hand tools, cutting tools, abrasives, adhesives & PPE items such as gloves and safety glasses

> Manage up to 60 individual products

> Easy to use touch screen interface & bar code Scanner

> High levels of control over item issues

> Visibility of products through glass front

1

InvendTM Carousel

Ideal for a wide range of industrial consumables such as hand tools, cutting tools, abrasives, adhesives &

PPE such as gloves, glasses & ear protection

> Manage up to 560 individual products

> Flexibility to carry a wide range within small footprint

> Easy to use touch screen user interface

> High levels of control over item issues

2

InvendTM Locker

Suitable for large items or bulk issues of expendable items such as lubricants and boxed gloves

> Operates in combination with the InvendTM Coil or Carousel

> Manage up to 12 individual products

> Visibility of products through glass front

3

8

Invend™ Technology

Ethernet

InvendTM

Server

Internet

InvendTM

Machine

Customer Firewall Firewall

Port 80 & 443

9

Benefits for Brammer’s customers

Why Brammer Invend™?

Invend™

offers:

Reduced product

consumption. By controlling

the use of fast-moving

industrial consumables, a

customer can typically cut

spend by 25 to 40%

Reduced replenishment

costs and simplified

processes. We handle re-

stocking, saving the

customer money and

reducing wasted staff time

Health and Safety

Compliance. The

customer knows what

has been vended

when, and to whom.

Lower inventory costs, greater efficiency,

and improved productivity. The customer

only pays for the items he uses, removing the

need to carry the cost of inventory. Products are

available when and where the customer needs

them, allowing the customer’s staff to use time

productively, instead of visiting stores to restock

11

Who Benefits?

24/7 availability across the customer’s business

Production and

Maintenance

• Improves control and

availability of required

products

• Reduces wasted walk

and waiting time

associated with visits to

stores

Purchasing

• Reduces consumable

MRO usage by 25-40%

• Reduces suppliers and

total cost of ownership

• Improves usage

reporting by user and

cost centre

Health and Safety

• Only approved PPE

equipment is available

on the shop floor

• Audit trail of issued

health and safety items

Stores

• Saves wasted staff time

by removing the need to

order, replenish and

raise paper work for fast

moving MRO items

12

Benefits for Customers

13

Benefits for Brammer

Invend™ Direct and Indirect Growth

1. Invend™ generates DIRECT GROWTH

– Direct growth is the revenue generated through the machine

– Almost all of the business transacted through the machine is new business to

Brammer

– Mainly PPE and TGM: NOT cannibalising existing business

2. Invend™ generates INDIRECT GROWTH

– Through better customer engagement and visibility the customer sites with

Invend™ machines grow faster than the rest of the business

– Indirect growth is the additional revenue attributable to the Invend™ presence

at customer site outside of the vending machine

– Indirect growth is across ALL product ranges 15

Indirect Growth

• In selling Invend™ we have engaged with:

– Health and Safety Managers

– Purchasing Managers

– Production Managers

– Maintenance Managers

– Factory Managers

• Multiple critical customer collisions during pre-sales process

• Post-installation, Brammer is “front of mind” through:

– Invend™ machines are a very visible Brammer presence on the customer site

– Direct access to customer site for replenishers – we are a trusted part of the

customer’s supply chain

16

Comparison of Product Mix – H1 2015 vs H1 2014 like for like sales across 317 sites

• We sell more of ALL product groups to customer sites with vending

machines

YTD JUNE DIRECT SALES MIX

TGM 85%

CHEMICALS 8%

OTHERS 7%

100%

YTD JUNE

2014 2015 GROWTH GROWTH % MIX

BEARINGS 1,550 1,849 299 19.3% 8.3%

LINEAR MOTION 310 326 16 5.1% 1.5%

POWER TRANSMISSION 3,823 3,884 60 1.6% 17.4%

FLUID POWER 4,424 4,945 521 11.8% 22.1%

CHEMICALS 685 998 313 45.8% 4.5%

FASTENERS 379 414 35 9.2% 1.8%

TGM 3,384 6,382 2,998 88.6% 28.5%

SEALS 962 1,102 139 14.5% 4.9%

SERVICES 438 600 163 37.1% 2.7%

OTHERS 1,223 1,865 643 52.6% 8.3%

17,178 22,366 5,188 30.2% 100.0%

INVEND CUSTOMER TOTAL SALES

All values in €000s17

Progress To Date

Cumulative Number of Machines Signed in Agreements

• Agreements have now been signed for 1,206 machines

0

200

400

600

800

1000

1200

1400Jan-1

3

Feb

-13

Ma

r-1

3

Apr-

13

Ma

y-1

3

Jun-1

3

Jul-1

3

Aug-1

3

Sep-1

3

Oct-

13

No

v-1

3

De

c-1

3

Jan-1

4

Feb

-14

Ma

r-1

4

Apr-

14

Ma

y-1

4

Jun-1

4

Jul-1

4

Aug-1

4

Sep-1

4

Oct-

14

No

v-1

4

De

c-1

4

Jan-1

5

Feb

-15

Ma

r-1

5

Apr-

15

Ma

y-1

5

Jun-1

5

19

Updates – Quarter on Quarter

Q1 Q2 Q3 Q4

Machines Signed 2015 237 304

2014 111 97 110 188

2013 11 34 28 86

Q1 Q2 Q3 Q4

Machine Installations 2015 172 194

2014 65 104 105 135

2013 1 13 30 71

Q1 Q2 Q3 Q4

Machines Live 2015 658 845

2014 178 278 370 501

2013 1 14 44 115

20

Updates – Quarter on Quarter

Q1 Q2 Q3 Q4

Total Account Sales 2015 10,370,694 11,995,246

for sites with vending machines 2014 3,092,425 4,756,445 6,708,560 8,237,585

2013 8,766 134,608 615,162 819,711

Q1 Q2 Q3 Q4

Invend Growth Rate 2015 37.2% 24.7%

2014 74.0% 47.5% 62.1% 48.4%

2013 - 243.2% 35.9% 106.5%

Q2 two days shorter than Q1

All values in €uros21

Invend™ Update - June

• Signed 136 machines in June

• Installed 74 machines in June

• Live machines 845

• Pipeline of 316 machines to install

• 117 people directly involved in InvendTM

YTD

• 541

• 366

Total

• 1,206

22

Key Accounts vs Regional Accounts (2015 June YTD)

Regional Base Business Key Accounts

Number Customers 161 83

Number of sites 168 149

Number of Machines end Q2 378 439*

Number of machines end Q1 295 336*

Average Machines per site 2.3 3.0

H1 2015 a/c Growth 63% 24%

H1 Account Sales €4,595k €17,771k

*Excludes 28 machines at Alcoa in the Nordic region. Related sales numbers also excluded for consistency.

23

Brammer Invend™ for Key Accounts

Invend™ and the Brammer Value Proposition

Reduce your total

acquisition costs

Improve your

production efficiency

Reduce your

working capital 01 02 03Reduced Consumption

Completely automated

process

Brammer has a unique cost savings program that helps you save money

All saving definitions and calculation methodologies are captured and agreed in a cost saving overview document

Three key focus areas

Walk and wait time saving

24/7/365 availability

Stock owned by

Brammer until

dispensing

25

Invend™ saves costs for our customers

• 74 Cost Savings already logged

• 22 Cost Savings forms signed off by

customers for a total value of € 175 k

26

Invend™ for Key Accounts

0

50

100

150

200

250

300

350

400

450

500

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

# MACHINES AT KEY ACCOUNTS • 83 customers

• 149 sites

• 439 machines live

27

Quarterly Invend™ sales

0

100

200

300

400

500

600

700

800

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

QTR INVEND SALES • Current annual direct sales run

rate > € 3m

• Accelerating trend

28

Some Customer References

29

Rapid deployment within large European customers

• Nine Key Account customers already have InvendTM machines live in

more than one country

• Most advanced customer has 79 machines installed on 32 sites across 4

countries … and more to come!

30

The Brammer Invend™ Infrastructure

Specialist Invend™ Team

• Total annualised spend of £6 million

• Our business development efficiency has increased consistently in each of the last 6

quarters – the number of staff has plateaued but the number of agreements per person per

month has increased significantly

• We have capacity in place to win 300 agreements per month, as efficiency continues to

improve

Resource summary

Dec

'13

Dec

'14

Jan

'15

Feb

'15

Mar

'15

Apr

'15

May

'15

June

'15

Nb Invend Attack Vans 10 21 21 21 21 21 21 21

INVEND MANAGER 5 11 11 11 11 11 11 11

INVEND SALES EXECUTIVES 15 26 26 24 23 21 19 20

PROPOSALS COORDINATOR 7 18 18 19 20.5 20.5 19.5 19.5

INSTALLATION COORDINATOR 3 8 10 10 10.5 10.5 10.5 10.5

DATA & PRICING/DEMAND COORDINATOR 1 5 5 5 5 5 5 5

SUPPORT/REPORTING 1 6 6 6 8 8 9 10

TOTAL FTE (excl Telesales) 32 74 76 75 78 76 74 76

Additional (telesales, Installation, Helpdesk, Team leaders) 8 32 32 32 31 31 31 32

Centre Team 8 10 10 10 10 9 9 9

TOTAL FTE 48 116 118 117 119 116 114 117

32

Infrastructure

• 117 people

• 21 Invend™ Attack Vans

• Order book across 15 countries

• ‘Invend™ Certified’ Product Database –

30k+

• Fully integrated into ERPs

33

Benefits for Brammer – the Financial Model

Total Sales to Invend™ Customer Sites

All values in €uros

• Solid growth and steady

margins, consistent with

Brammer’s average

35

Invend™ Modelling – profitability per machine

Model Assumptions

• First full year annualised Direct Growth = €8k by year end

• First full year annualised Indirect Growth = €16k by year end

• Both Direct and Indirect Growth increase further over time

• Gross Profit similar to Brammer’s current average

• “Drop-through” after Incremental SDA = 10% Trading Profit

• Average machine cost = €8k

• ROCE = 30% per annum

• Machine life > 10 years

• Depreciation 7 years straight line

• Machine inventory turns > 12 times

• Funded from cash flow and existing facilities

These assumptions

have been proven

36

Brammer’s Competitive Advantage and Barriers to Entry

Competitive Advantage

• Differentiator from our competitors

– “purchase your PPE and use the Invend™ Service for control”

• Customers with Invend™ are buying new product ranges from Brammer (TGM & PPE)

– No cannibalisation of existing Brammer business, even though customer consumption of vended items reduces

• “Machine behind the machine” is a differentiator. It is complex to consistently deploy 100s of machines across Europe

– Large investment – We have so far spent over £10 million of S,D&A solely on developing the vending concept

– Difficult for others to replicate

– 15 countries live (UK, IE, IS, NO, PL, ES, FR, BE, NL, DE, CZ, IT, CH, AT, PT)

38

Barriers to Entry

• It is complex to deploy consistently

– Our “One Brammer” approach to Best Practice (Synergies) has come

into its own:

• Marketing

• Sales process

• Quotation process

• Machine configuration

• Machine installation

• IT infrastructure and Customer reporting

• Product development

• Replenishment process

39

Economies of Scale – Brammer specific competitive advantage

• The “Machine behind the machine” - huge investment made

• Breadth and capability of the supply chain

– Inventory & Infrastructure - warehousing, branch network, purchasing

• Relationship with Suppliers – and bargaining power

– 27,000 suppliers – significant growth with TGM & PPE suppliers

• Access to existing customers

– Over 100,000 customer sites in 23 countries

– Only 200 customers and 317 customer sites have so far adopted vending

– 0.3% of customer sites, but these customers now represent 5% of revenues and

are our fastest growing group of customers

– Access to existing Key Accounts!! Sell once, win dozens of machines…..

– We become further embedded at the customer

40

Barriers to Entry – Capital Requirements

• €8000 investment per machine

• Customer is charged a monthly software fee– The machine is free to the customer

• Returns are generated from direct and indirect sales growth

• Indirect growth is double direct growth

• To get indirect growth you need the full product range– PPE– TGM– Bearings– Mechanical/Electrical Power Transmission– Fluid Power

• Model does not work without full product range

41

The Machine behind the Machine…

Packaging

Local Sales

Force

Product Templates

Regional Build Centres

Support & Training

Local Branch Fulfilment42

Potential Upsides

• Product substitution with Brammer own-brand products will increase

margin significantly

– -

– -

• Faster development of PPE/TGM spend leading to better pricing and

rebates

• SDA efficiency improvements linked to machine density

43

Summary

Summary

• Invend™ is a great solution for customers

– Productivity, Availability, Consumption reduction, Compliance

• Invend™ is complementary to, and leverages our Key Account and TGM

growth drivers

• Invend™ delivers proven profitable growth for Brammer:

– Direct sales growth and Indirect sales growth, in a ratio of 1:2

• Customer sites with Invend™ are proven to grow faster than the rest of

the business

• The industrial vending market is an undeveloped channel to market,

represents a huge opportunity, and has high barriers to entry

• Brammer is Number One in Europe, and we will extend our lead

45

Questions

46