Accelerating growth in commodity trading & risk software

21st Aug '09 by StrollingMolby

7 comments 5518 reads

A thread for general discussion of the company and developments that affect it.

Brady offers a choice of transaction and risk management applications designed to help producers, consumers, financial institutions and trading companies manage their commodity transactions in a single integrated solution - including pre-deal analysis, trade capture, foreign exchange, credit risk, logistics, cash management, physical operations, back office financials, settlement and much more.

http://www.bradyplc.com/

Share price (p)                62.5
Shares in issue (m)       28.2
Mkt cap (£m)                   17.6

2008 Results (to 31 Dec 08)
Turnover (£m)                   6.2
EPS (p)                              2.7
P/E                                   22.9
NTAV (£m)                       9.9
NTAV/share (p)              35.2
Net cash (£m)                  6.9 *
Cash/share (p)              24.5 *
Dividend (p)                      1.2
Yield                               1.9%

*as at 28 Feb 09

(More to follow)

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emptyend

22nd Aug '09

Interesting company. I'm surprised I hadn't heard of it, though, in its early days as a website article says:

Dr. Brady began in 1985 developing pricing algorithms for the FX market, and by 1989 this had expanded to include swaps, interest rate derivatives and metal derivative risk management solutions. Within ten years the company had started to make a real name for itself in the metals and commodities markets.

....though it seems they were pretty quick in figuring out that the financial derivatives space in the early 1990s had many more competitors than the commodities space did!!

I guess my main concern would be over the potential for top line revenue growth. £6.2mn turnover ain't a lot, especially when it is on the back of perhaps the most volatile period that the commodities markets have ever seen? What are the forecasts for revenue growth this year? If they can't post a (very) substantial rise then I'd worry. And I'd also be concerned about revenue erosion in the future, with the government-inspired restrictions on commodity trading positions and the drift of the locus of commodities activities towards Asia.

Just first thoughts....

marben100

7th Sep '09

Solid interims just released (strange time of day to do so!): http://fool.uk-wire.com/cgi-bin/articles/20090907145623PF3CD.html

Financial Highlights:

* Sales up 49% to £3,691,000 compared to £2,475,000 for H1 2008

* Recurring maintenance revenues up 38% to £1.4 million compared to £1.0
    million for H1 2008

* Operating profit up 706% to £274,000 compared to £34,000 for H1 2008 and
    profit before taxation up 42% to £309,000 compared to £218,000 for H1 2008
    in spite of significantly reduced interest income earned from cash balances

* Earnings per share up 31% to 0.80 pence per share compared to 0.61 pence
    per share for H1 2008

* £5.8 million of net cash as at 30 June 2009 (equivalent to 21 pence per
    share) after investing activities totalling £2.0 million in the period and
    £6.2 million of cash resources as at 31 August 2009 (equivalent to 22 pence
    per share)

Operational Highlights:

* Successful integration of Comsoft acquisition

* Three significant new contracts signed in H1 of 2009 compared to one
    significant new contract in H1 2008

* Seven more clients have reached project acceptance or have gone live

StrollingMolby

8th Sep '09

New Edison note issued http://www.edisoninvestmentresearch.co.uk/research/category/Brady

2009 FY Forecast

Revenue	£7.57m
Cost of Sales	(£2.95m)
Gross Profit	£4.62m
EBITDA	£1.59m
PBT	£1.43m
PAT	£1.03m
EPS	3.7p
Dividend	1.3p

Year-end cash bal estimated at £7.2m

21st Oct '09

Presentation up on Brady's website given by Dr Robert Brady at Commodities Week in London 7-9 October, promoting the advantages of the Brady solution to metal traders.

http://www.bradyplc.com/pages/MediaLibrary/files/news/brady_commoditesweekeurope_copy4.pdf

And the following week was 'LME Week' where 4,000 metal buyers and sellers from Singapore to Santiago arrive in London to find partners in an annual ritual called LME Week. More than 95 percent of the exchange’s business is from overseas.

"Miners and manufacturers aren’t the only ones meeting this week. Just 1 percent of metal contracts traded in London are taken for physical delivery. The remaining 99 percent of trades are by banks, hedge funds and other investors.

“You are bringing in the bankers, you are bringing in those who are financing metal,” said Mike Frawley, global head of metals at trading firm Newedge Group. “You bring in the shippers and you bring in the whole of the industry.” That makes LME Week crucial for gathering information.

“The LME is giving transparency,” said Patrick Ammerlaan, head of metal sales at Boliden AB, Europe’s second-largest zinc producer. He’s flying from Sweden to attend the week’s main event, a black tie dinner for 2,000 on Tuesday evening where brokers host clients at the Grosvenor House Hotel on Park Lane.

“I have never told my wife about the expression ‘the mating season,’” Ammerlaan said. “It’s the first indications that people give to each other, like new lovers.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aqkz1Tl2um78

SM

19th Jan '10

Brady issued this positive Trading Statement today:

In aggregate, the Group anticipates exceeding the market forecasts for revenues for 2009, showing revenue growth of approximately 30% compared to 2008. This is a strong performance in the face of challenging economic conditions.

To support this growth, the Group has continued to invest in its commercial activities and delivery headcount. Despite additional investment, the Company anticipates achieving the market forecasts for 2009 operating profit and profit before taxation on ordinary activities.

The Group's net cash balances at 31 December 2009 were GBP5.9 million.

The statement indicates therefore that revenues will be a shade higher than £8m, with PBT of a little over £1m.

However, one-off costs in relation to an aborted transaction will reduce net profit by £140k, and by my reckoning reduce EPS by 0.5p.

PS Disclaimer - I sold out on the last spike above 70p in November

10th Mar '10

No longer holding here, but seeing as I started the thread, it's probably good form to put the 2009 results link up here:

Financial Highlights:
·     Sales revenue up 33% to GBP8.2 million compared to GBP6.2 million for 2008, including recurring maintenance revenues of GBP2.9 million compared to GBP2.1 million for 2008
·    Operating profit before exceptional item up 63% to GBP1.1 million compared to GBP0.7 million for 2008 and profit before taxation and exceptional item up 14% to GBP1.2 million compared to GBP1.0 million for 2008 in spite of significantly reduced interest income earned from cash balances
·    Profit after taxation but before exceptional item up 59% to GBP1.2 million compared to GBP0.8 million for 2008 following R&D tax credit claims
·    Earnings per share before exceptional item up 56% to 4.27 pence per share compared to 2.73 pence per share for 2008
·    Proposed final dividend up 8% to 1.3 pence per share compared to 1.2 pence per share for 2008
·    Strong balance sheet with GBP5.9 million of net cash (equivalent to 21 pence per share) after investing activities totalling GBP2.2 million in the year and net cash of GBP6.1m million at 28 February 2010 (equivalent to 22 pence per share)

Operational Highlights:
·    Six significant new Trinity licence agreements signed in 2009, including contracts with global metals powerhouses in South America, a major deal with a global metals client in Japan and a landmark deal with a significant gold clearer
·    Successful integration and strong performance of the Comsoft acquisition
·    Nine more clients have reached project acceptance or have gone live in 2009

No doubt there'll be a new Edison note along in an hour or two.

In reply to StrollingMolby (post #6)

The note was ahead of your post :0) : http://www.stockopedia.com/document/view/38326/positioned-for-growth

..."positioned for growth" - yet forecasting an EPS DECLINE for the current FY to 4.1p & 4.6p for the following year.

Doesn't look particularly cheap, and like you, I've been out for a while. Worth watching though. If their pipeline does convert, those figures could easily be exceeded.

Cheers,

Mark

Accelerating growth in commodity trading & risk software

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