Booming Brulines target major wave of buy-outs

Dec 3 2008 by Peter McCusker, The Journal

BUSINESS is booming at beer, petrol and vending machine monitoring company Brulines which is predicting annualised growth of up to 15% for the next five years.

At a time when Brulines, which has 210 staff, is looking to keep a tight rein on costs, the Stockton-based company is finding its products are in increasing demand.

Half year results released yesterday showed turnover up more than 10% to £8.9m with profit before tax up 12% to £2.47m.

Despite gloomy forecasts that 4,000 pubs are set to close over the next few years, Brulines believes it is well-placed to continue its growth.

On-going trials of its premier beer monitoring products in Denver look set to result in a roll-out across the United States and its recent purchase of Sunderland-based petrol monitoring company Edensure in October this year bodes well.

James Dickson, chief executive of Brulines, said: “Business is going very well. We are on track to hit our year end targets and the prospects for the future are extremely good.”

Mr Dickson predicts the company will grow between 10% and 15% a year over the next five years without acquisitions. However the company is cash-rich and, with lots of headroom in its banking agreements, expects further purchases soon.

The company has bought three businesses since it launched on the stock market in the summer of 2006

Mr Dickson added: “We are an ambitious company and are in a good position to take advantage of any opportunities that come our way. Over the next 6-18 months a lot of distressed assets may become available.”

By March next year Brulines says it will make a decision on whether to roll out its products across the United States when the results of the Denver trial are known.

Mr Dickson seems confident this will be successful and is considering rolling the products out across the country, in a tie-up with four national bar operators, starting in the Washington area.

Likewise he believes the market for its petrol monitoring products – of which it currently only has 2% of the market – has significant room for development. Brulines is talking to a major supermarket operator about its forecourt product.

Chairman James Newman said: “Importantly, the defensive qualities of our business model are demonstrated by the fact that over 65% of group revenue is now derived from recurring contracts with the associated increase in gross margin to 55%.”

Analysts Charles Stanley describes the company’s performance as “strong” and put a buy recommendation on shares with a price target of 191p. The shares finished the day down slightly at 125.50p