Brady Regulatory News (BRY)

11 Mar 2005 07:00

BRADY PLC 11 March 2005The commodities solutionwww.Bradyplc.com Brady plc Preliminary Audited Results For the Year ended 31 December 2004 Brady plc the supplier of operational and risk management software to thecommodities market and financial institutions announces its first preliminaryaudited results as a member of AIM for the year ended 31 December 2004, withstrong operating results.Highlights * Basic earnings per share up 118% to 6.1p (2003: basic 2.8p) * Revenues doubled ‚£4,832,440 (2003: ‚£2,386,644) * Operating profit 193% up at ‚£1,780,478 (2003: ‚£608,631) * Net funds at 31 December 2004 ‚£4,550,562 (2003: ‚£1,815,274) * Colplan Acquisition completed in July. * Colplan metals hived up and included in continuing operations. * Closed, completed or upgraded six Colplan contracts post acquisition * Investment in and expansion of international sales * Prospective sales pipeline largest in company's history * Completion and introduction to customer testing of V600 of Trinity * Foundation work on extending risk management techniques into supply chain management. A presentation for analysts will be held today at 9.30 at the offices of OrielSecurities Ltd,4 Wood Street, London EC2V 7JB (Tel. 020 7710 7600).Contact :Brady PLC.Graham Simister Executive Chairman 01223 479 479Robert Brady Chief Executive 01223 479 479Richard Kellett-Clarke Finance Director 01223 479 479CHAIRMAN'S REPORTOverviewI am pleased to report on another successful year for Brady. In highlightingsome of the major achievements below it is clear it has been a particularlybusy year for the group. The fact that all this has been achieved whileincreasing sales, profitability and cash is a testament to the quality of theteam at Brady and the dedication of all the professionals in the organisation.Brady intends to reinforce its market leading position in providing softwaresolutions for commodity trading. Building on our acknowledged strengths infront to back office solutions for members of the London Metal Exchange andassociated banks, trading houses, producers and consumers, our aim is to becomethe primary supplier of a new breed of solution that tracks and manages theentire commodity supply chain, starting with the original ores andconcentrates, through shipment to the smelter and conversion into metal, andsubsequently to the production of semi fabricated products for the finalconsumer.FlotationAs an important step in the strategic development of Brady, the company waslisted on the London Stock Exchange's AIM Market in June 2004. This not onlyincreased the cash reserves and further strengthened the balance sheet, butalso enabled the true value and stability of the business to be demonstrated toour customers. The company is now positioned to grow organically, and to takeadvantage of acquisition opportunities that may arise and enable Brady to buildrapidly on its full front to back office and physical supply-chain solution.ColplanDuring the year the company acquired Colplan Systems Ltd to complement itscommodity trading solutions. Colplan's respected product, Opval, has added atrader-focused front- and mid-office solution, which we can cross-sell into ourexisting customers and vice-versa with Trinity. This acquisition has broadenedour customer base, increased our share of our core market, and increased ouron-going maintenance revenue stream. It extends our offering with a specialisedsolution for the newly established markets for trading gas and electricity.CustomersBrady provides operational and market risk management software to financialinstitutions, trading companies and more recently large corporations. Inaddition to ongoing work with market leaders like Gerald Metals and SempraMetals Group in 2004, Brady has strengthened its market position by selling itsTrinity product to Alcan Inc. and HSBC.ProductsWe continue to enhance the functionality of our main Trinity product. We are acustomer led business, offering the most comprehensive integrated solution forphysicals management, treasury, contract management, and transaction processingfor traders of commodities and related financial instruments. We assist ourclients with workflow process automation, regulatory compliance and riskmanagement.Strategy and OutlookThe market for commodity systems has been strong in the past two years. This isin part due to the strong trading performance of the metals and mining sectorand the cyclical demand to upgrade systems, and also due to the increase intrading volumes and new regulatory requirements. More importantly, we believeour continuing investment in the supply chain management capability of oursystem means we are extremely well positioned to help our customers andconsulting partners to improve business processes and to benefit fromconsequential efficiency gains.The timing of customer investment in software is always hard to predict, butthe Board remains confident of the Company's future growth. With our recentinvestment in the Trinity product focused on the industry's supply chainmanagement requirements, the potential market size is substantial. As long aswe remain focused on working closely with our customers and continually drivingquality higher, we believe the company will continue to prosper.Your Board's target is to show further growth in market share, revenue andprofits in 2005.Graham SimisterChairmanCHIEF EXECUTIVE'S REPORTBrady completed another successful year in 2004, and remained focused on itscustomers while successfully listing on the London Stock Exchange's AIM Marketand completing the acquisition of Colplan Systems Ltd.Brady supplies mission critical software to its customers, and a key objectiveof the flotation was to further demonstrate to those customers our financialstrength and suitability as a long-term business partner.Financial Results - Operating PerformanceGroup sales increased by 102.5 per cent to ‚£4,832,440 (2003: ‚£2,386,644). Thisincrease in sales reflects the major contracts won in 2003, which continuedinto 2004, and the new contracts with HSBC and Alcan that began to contributein the second half of the year and will continue to generate revenues in 2005.Operating profit for the year was ‚£1,780,478 (2003: ‚£608,631). Operating profitfor the year before amortisation of intangibles was ‚£1,831,715 (2003: ‚£608,631). The group's operating margin increased to 36.8 per cent.Development expenditure for Trinity is, and has historically been, expensed inthe year incurred meaning there is no depreciation of capitalised developmentwork.Financial Results -Balance Sheet and Cash FlowGroup cash flows from operations were ‚£566,022 (2003: ‚£1,578,170) and wereceived ‚£134,311 of interest and paid ‚£2,374 of tax, resulting in a net cashinflow of ‚£697,959 before acquisitions and capital investment.The balance sheet was further strengthened by the net ‚£2,402,161 that wasraised through placing of shares on flotation.The acquisition of Colplan Systems Ltd resulted in goodwill of ‚£1,024,741 thatis being amortised over 10 years.Operational ReviewWe firmly believe that the key to our success is our strong relationships withthe key customers in the industry and the principal industry consultants whoadvise our customers. Strong relationships are only earned through qualityproduct and successful implementations. We are pleased that a high proportionof our new business opportunities continue to be derived through recommendationfrom customers and consultants.The next version of the company's flagship product, Trinity version 600, isanother important step in our strategy of becoming the primary supplier of anew breed of solution that tracks and manages operational and market riskthrough the entire commodity supply chain, from ores and concentrates to endconsumer product.Development began in early 2004 and was sponsored by a significant customer. Itis now onsite for customer testing, and will be placed on general releaseduring 2005.In anticipation of the success of Version 600 the company made significantinvestment in its sales and marketing activities during the second half of2004. Our goal is to strengthen our close relationships with customers andconsulting partners around the world, and at the same time to attract newcustomers, particularly among the mining and metals industry.Not every customer has a requirement for a complete solution spanning frontoffice, back office and supply chain management, and for us to remain theindustry leader in this sector, we must continue to supply all principalcustomer requirements in a timely fashion. The acquisition of the Opval productfrom Colplan has added a trader-focused front office solution for derivativetraders and risk managers, as well as supporting and providing an entry pointinto new markets in energy and electricity.There is an industry trend towards out-sourced solutions in order to increaseefficiency and reduce costs. Following a recent successful out-sourcedimplementation of our products in conjunction with a major consulting group inlate 2004, the company has begun to offer managed services to its new customersand industry partners.OutlookThis has been an important year for the future development of the group. Thefoundation has been successfully established for growth. Our investment insales and marketing will continue in 2005 as we expand our international saleseffort, and our investment in expanding the product will continue further intothe supply chain. We will continue to examine strategic acquisitions tomaintain our leading market position.I would like to thank the Brady team of professionals for their efforts in2004.Robert BradyChief Executive Brady PLC Consolidated Profit and Loss Account For the year ended 31 December 2004 2004 2003 ‚£ ‚£Turnover Continuing operations 4,720,504 2,386,644 Acquisitions 111,936 - 4,832,440 2,386,644 Cost of sales 451,553 147,555 Gross profit 4,380,887 2,239,089 Administrative expenses 2,600,409 1,630,458 Operating profit/(loss) Continuing operations 1,908,736 608,631 Acquisitions (128,258) - 1,780,478 608,631 Interest receivable and 134,311 19,997similar income Profit on ordinary activities 1,914,789 628,628before taxation Taxation on profit on ordinary 481,527 47,203activities Retained profit for the year 1,433,262 581,425 Earnings per ordinary share Basic 6.1p 2.8p Diluted 5.8p 2.8p Adjusted basic 6.4p 2.8p Adjusted diluted 6.0p 2.8p Brady PLC Consolidated Balance Sheet For the year ended 31 December 2004 2004 2003 ‚£ ‚£ Fixed assets Intangible assets 973,504 - Tangible assets 129,085 116,698 Investments 15,027 15,027 1,117,616 131,725 Current assets Debtors 1,524,374 310,440 Cash at bank and in hand 4,550,562 1,815,274 6,074,936 2,125,714 Creditors: amounts falling due within one year (1,298,599) (912,409) Net current assets 4,776,337 1,213,305 Total assets less current 5,893,953 1,345,030liabilities Provisions for liabilities, (25,000) -charges and deferred tax 5,868,953 1,345,030 Capital and reserves Called up share capital 258,062 206,360 Share premium account 3,021,778 662,819 Merger reserve 680,000 - Capital reserve 1,000 1,000 Profit and loss account 1,908,113 474,851 Shareholders' funds 5,868,953 1,345,030 Brady PLC Consolidated Cash Flow Statement For the year ended 31 December 2004 2004 2003 ‚£ ‚£ Net cash inflow from operating activities 566,022 1,578,170 Returns on investments and servicing of finance Interest received 134,311 19,997 Net cash inflow from returns on investments and servicing of finance 134,311 19,997 Taxation (2,374) (46,811) Capital expenditure and financial investment Purchase of tangible fixed assets (82,628) (97,049) Net cash outflow from capital expenditure and financial investment (82,628) (97,049) Acquisitions Acquisition of business (282,204) - Financing Issue of ordinary share capital 2,864,224 - Issue costs (462,063) - Net cash inflow from financing 2,402,161 - Increase in cash 2,735,288 1,454,3071. BASIS OF PREPARATIONThe financial information set out above in respect of 31 December 2004 does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The financial information contained in this announcement has beenextracted from the 2004 financial statements upon which the auditors opinion isunqualified and does not include any statement under Section 237 of theCompanies Act 1985.The preliminary announcement has been prepared in accordance with applicableaccounting standards and under the historical cost convention.The principal accounting policies of the Group are set out in the 2003 annualreport and financial statements. The policies in this preliminary announcementhave remained unchanged from the 2003 financial statements.2. Taxation on profit on ordinary activitiesThe taxation charge represents: 2004 2003 ‚£ ‚£ Corporation tax at 30% (2003: 19%) 501,356 47,203 Adjustments in respect of prior periods (44,829) - Total current tax 456,527 47,203 Deferred taxation: Origination of timing differences 25,000 - Taxation on profit on ordinary activities 481,527 47,2033. earnings per shareThe calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year.The calculation of diluted earnings per share is based on the basic earningsper share adjusted to allow for the issue of shares on the assumed conversionof dilutive options.Reconciliation of the earnings and weighted average number of shares used inthe calculations are set out below. 2004 2003 ‚£ ‚£ Basic and diluted earnings per share Profit for the financial year 1,433,262 581,425 Number Number Weighted average number of ordinary shares in issue 23,370,477 20,635,997during the year Basic earnings per share (pence) 6.1 2.8 Diluted earnings per share (pence) 5.8 2.8 Earnings per share (continued) Reconciliation of average number of ordinary shares used for basic and diluted earnings per share Number Number Weighted average number of ordinary shares used for basic 23,370,477 20,635,997earnings per share Weighted average number of shares under option 1,209,854 - Weighted average number of ordinary shares used for 24,580,331 20,635,997diluted earnings per share Adjusted basic earnings per share and adjusted diluted earnings per share arebased on earnings attributable to ordinary shareholders adjusted for goodwillamortisation. Reconciliation of the earnings used in the calculations is setout below. 2004 2003 ‚£ ‚£Adjusted earnings per share Operating profit 1,780,478 608,631 Goodwill 51,237 - Adjusted operating profit 1,831,715 608,631 Net interest 134,311 19,997 Adjusted profit on ordinary activities before taxation 1,966,026 628,628 Taxation on adjusted profit on ordinary activities 481,527 47,203 Adjusted profit for the financial period 1,484,499 581,425 Adjusted basic earnings per share (pence) 6.4 2.8 Adjusted diluted earnings per share (pence) 6.0 2.84. Net cash inflow from operating activities 2004 2003 ‚£ ‚£ Operating profit 1,780,478 608,631 Depreciation 70,182 66,886 Loss/(profit) on sale of tangible fixed assets 59 (393) Amortisation of goodwill 51,237 - (Increase)/decrease in debtors (1,192,404) 431,152 (Decrease)/increase in creditors (143,530) 471,894 Net cash inflow from operating activities 566,022 1,578,1705. REPORT AND ACCOUNTSCopies of the annual report and accounts will be posted to the shareholdersshortly.ENDBRADY PLC