Source - RNS
RNS Number : 4931J
Brady plc
12 September 2016
 

12 September 2016

 

 

Brady PLC

("Brady", the "Company" or the "Group")

 

INTERIM RESULTS

For the six months to 30 June 2016

 

Brady, the leading global provider of trading and risk management solutions for metals, recycling, energy and soft commodities, is pleased to announce its interim results for the six months to 30 June 2016.

 

Operations Highlights

·     70% of new business cloud deployed

·     Ten new deals across all business lines

·     Integration of sales teams

·     Retained #1 position across all metal products in Vendor Perception study

 

Financial Highlights

·     Revenues increased 5% to £14.8m from £14.1 m

·     EBITDA increased 72% to £2.04 m from £1.18 m

·     Recurring Revenues increased to 60% (from 55%)

·     Cash cost reduction of £1.6m in H1

·     Net Cash £6.4m (£6.2m)

·     Net cash generated £1m

·     Adjusted EPS 1.05p (0.53p)

 

Financial Summary:

 


(Unaudited)

(Unaudited)

(Audited)


6 months to

30 June

2016

6 months to

30 June

2015

Year to

31 December 2015


£'000

£'000

£'000





Revenue

14,758

14,106

27,374

Recurring revenue

8,914

7,799

15,249





EBITDA before exceptional items

2,043

1,184

2,450

Operating result before exceptional items

123

(389)

(959)

Dividend paid (pence per share)

nil

1.85

1.85





Adjusted earnings per share (pence) 2

1.05

0.53

0.98

Basic earnings per share (pence)

(0.32)

(0.53)

(2.09)





Cash

6,402

6,197

6,594

 

  Exceptional items

  H1-2016:  During the year costs were incurred in relation to the acquisition of Energy Credit of £0.3m

  H1-2015:  No exceptional items

1 Consistent currency numbers are calculated by translating the 2016 interim results at the same exchange rates as those used in the 2015 interim consolidation.

2 Adjusted earnings per share, as calculated by external analysts, are based on the profit after tax adjusted for acquired intangible assets amortisation, share based compensation, exceptional items and normalised tax.

 

 

 

Ian Jenks, Executive Chairman, commented:

 

"We are very pleased to have achieved the improvement in profitability with growth in overall revenue, EBITDA and cash generation despite the continued difficult market conditions.  At the end of 2015 the Company initiated a programme which has successfully delivered significant cost reductions. We are now focused on pursuing further opportunities to drive effectiveness and efficiency across the Group over the coming period." 

 

"The Company has leading market positions and best in class solutions which form a solid foundation to build upon. We believe our initiatives will fuel an efficient engine to facilitate growth and position the business to take advantage of any market upturn."

 

 

 

For further information please contact:

 

Brady plc

Ian Jenks,  Executive Chairman

Martin Thorneycroft, Chief Financial Officer

 

Telephone: +44 (0)1223 479479



Cenkos Securities                                                                           

Ivonne Cantu

Alex Aylen (sales)

Telephone: +44 (0)20 7397 8900

 

 

Redleaf Communications

Charlie Geller / David Ison / Sam Modlin

Telephone: +44 (0)20 7382 4730

 

 

About Brady

Brady plc (BRY.L) is the largest European-headquartered provider of trading and risk management software to the global commodity and energy markets. Brady combines fully integrated and complete solutions supporting the entire commodity trading operation, from capture of financial and physical trading, through risk management, handling of physical operations to back office financials and treasury settlement, for energy, refined, unrefined and scrap metals, soft commodities and agriculturals.

 

Brady has 30 years' expertise in the commodity markets with some 400 customers worldwide who depend on Brady's software solutions to deliver vital business transactions across their global operations. Brady clients include many of the world's largest financial institutions, trading companies, miners, refiners and producers, recycling companies, scrap processors, tier one banks and a large number of London Metal Exchange (LME) Category 1 and 2 clearing members and many leading European energy generators, traders and consumers.

For further information visit: www.bradyplc.com

Brady plc: Twitter/Facebook/LinkedIn 



 

CHAIRMAN'S STATEMENT

I am pleased to report that against a background of continued difficult market conditions, the Group has returned to profitability. Overall revenues grew by 5% and profit before exceptional items and tax improved by £0.5 million to a profit of £0.1 million (from a loss of £0.4 million). EBITDA improved 66% from £1.2 million to £2.0 million. Net cash inflow from operations improved by £2 million to £1.0 million compared to an outflow of £1.0 in the same period last year.

 

Recurring revenue and service fees increased to £8.9 million and £4.3 million from £7.8 million and £3.4 million respectively.  Recurring revenues now represent 60% of total sales (2015 - 55%).

 

In H1 2015 ten new licence deals were signed including two deals of c. £1 million each. In 2016 ten new licence deals were signed but not of comparable size to the prior year and as a result licence sales have declined from £2.9m to £1.5 million.

 

The Group's cost saving programme has progressed well, resulting in year on year cost reductions of £1.6m in the first half. 

 

The Group acquired ScrapRunner in September 2015 and energycredit in January 2016.  The revenues and costs of these companies are included in the 2016 results, but not in the comparatives for 2015.  Excluding the impact of acquisitions from the 2016 results; revenues declined by 5% (£0.7 million) whilst operating profit improved by £0.5 million due to the significant cost savings achieved more than offsetting the reduction in licence revenues.

 

The movement in foreign exchange rates between the two periods has been marginally positive. Revenues have benefited by £0.3 million and Profit before Tax by £90,000.

 

Business Units

 

The Energy business unit has continued the improvements from 2015.  Organic revenues were broadly flat but contribution grew to £1.4 million from £0.9 million as the business continues to improve efficiency. The acquisition of energycredit has provided a welcome addition to the Energy division's portfolio, providing upsell and cross sell opportunities. The first phase of integration with the existing Energy solution suite has been completed allowing existing customers to take advantage of this complimentary functionality as an add-on to their existing ETRM solution. Additionally, Brady continues to be at the forefront of other Energy market changes. The market harmonisation projects in the Nordics are now due to be implemented during 2017, with Brady's solution well advanced to enable companies to participate in the market. As an existing supplier to the Irish market, Brady is also deeply involved with the Integrated Single Electricity Market (I-SEM) project and is well positioned to service these requirements.

 

In the Commodities business unit, sales fell from £6.1 million to £6.0 million (£5.9 million in consistent currency).  This is the net position of a fall in licence revenue of £0.6 million partially offset by increases in both maintenance and services revenue.  Despite the fall in revenues, contribution remained flat at £1.6 million. Brady has retained its leading position across all metal products in the 2016 vendor perception study and signed three new Cloud deals with metal trading companies in the period. The ability to offer end to end Cloud deployed solutions, covering soft commodities, ores, concentrates, refined and precious metals and scrap  is becoming a key differentiator from the competition. Our Cloud solutions allow customers a cost efficient and quickly deployed alternative to traditional client installed models.

 

In Recycling, organic revenues declined by £0.5 million. This is a combination of a £0.7 million fall in licence sales partially offset by an increase in maintenance and services revenue.  Organic contribution declined by £0.2 million. The business unit onboarded six new customers and in response to customer requests, the ScrapRunner handheld container management software has now been launched for use on Android devices. 32 ScrapRunner customers migrated their solutions to the Brady Cloud environment.

 

 

 

People

 

As previously announced, Gavin Lavelle has stepped down as CEO and in the interim, I have assumed operational control of the Company until a replacement is appointed.

 

Looking forward

 

Continuing the momentum achieved in the first half with the Group's return to profitability and the significant cost reduction, the Board will be implementing further measures to drive the effectiveness and efficiency of the Group's operation.  The review of its organisational structure has already begun and it is our intention to integrate the business more closely across its disciplines including sales, technology and support. This will enable us to drive common systems, methodologies and processes across the Group and importantly enable quicker and more efficient delivery of our products to our customers.

 

Although current market conditions are difficult the Group has leading market positions, best in class solutions and strong people and teams; we are focused on capitalising on these foundations and building an efficient engine for success to support our future earnings growth.



FINANCIAL RESULTS

Group Revenues

 

Revenue by Type


H1 2016

H1 2016

Revenue included from acquisitions

H1 2016

Revenue excluding

acquisitions

H1 2015

 






 

Software licence sales

1,514

187

1,327

2,871

 

Recurring (maintenance, rental and hosting)

8,914

851

8,063

7,799

 

Service fees including development

4,330

332

3,998

3,436

 


14,758

1,370

13,388

14,106

 






 


H1 2016

H1 2016 (at consistent* rates)

H1 2015

Software licence sales

1,514

1,379

2,871

Recurring (maintenance, rental and hosting)

8,914

8,682

7,799

Service fees including development

4,330

4,387

3,436


14,758

14,448

14,106









* Consistent currency numbers are calculated by translating the 2016 interim results at the same exchange rates as those used in the 2015 interim consolidation.


The average exchange rate for both Swiss Francs and US Dollars was marginally beneficial with both strengthening against sterling by 3% and 7% respectively.  The average exchange rate for the Norwegian NOK was almost exactly the same for both periods.  Overall revenues were helped by exchange rate movements by £0.3 million (2%).

The acquisitions contributed £1.4 million (10%) to Revenue. Excluding the impact of acquisitions organic revenue declined by £0.7 million (5%) being a combination of a fall in Licence sales of £1.5 million and increases in recurring revenues and services of £0.3 million and £0.5 million respectively.

 

Software licence sales were £1.4 million less than the same period last year. In 2015 Brady signed 9 Licence deals including two deals of circ. £1million each. In 2016 we have signed 9 deals but there were no corresponding large deals.

 

Recurring revenue for the period was £8.9 million (£8.7 million at consistent currency rates) compared to £7.8 million in the prior period. £0.9 million of the £1.1 million was due to the impact of the acquisitions and £0.2 million (3%) is organic growth. Recurring revenues represent 60 per cent of total sales (H1 2015: 55 per cent). 

 

Service and development fees were £4.3 million (£4.4 million at consistent currency rate) against £3.4m last year. £0.6 million of the £0.9 million was due to the impact of the acquisitions an £0.3 million (9%) is organic growth.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue and Contribution by Business Unit

 

Revenue

2016

Included from acquisitions

H1 2016

excluding acquisitions


2015







Commodities

6,004

-

  6,004


6,129

Energy

6,466

974

 5,492


5,572

Recycling

2,288

397

1,891


2,405


14,758

 1,371

13,387


14,106

 

 

 

Contribution

2016

Included from acquisitions

H1 2016

excluding acquisitions


2015








Commodities

1,611

-

          1,611


1,646

Energy

1,445

(2)

1,447



934

Recycling

237

15

222



409


3,293

 13

3,280



2,989

 

 


Revenue

H1 2016

Contribution

H1 2016


Revenue

H1 2016 (at consistent* rates)

Contribution

H1 2016 (at consistent* rates)


Revenue

H1 2015

Contribution

H1 2015










Commodities

6,004

1,611


5,870

1,563


6,129

1,646

Energy

6,466

1,445


6,472

1,432


5,572

934

Recycling

2,288

237


2,106

210


2,405

409


14,758

3,293


14,448

3,205


14,106

2,989

 

 

* Consistent currency numbers are calculated by translating the 2016 interim results at the same exchange rates as those used in the 2015 interim consolidation.

 

 

 

 

Operating Result by Business Unit

 

·     Brady Commodities

Revenues decreased from £6.1 million to £6.0 million in the comparative period. In consistent currency revenues declined to £5.9 million. Contribution remained flat at £1.6 million (£1.6 million in consistent currency) as a result of the cost reduction exercise.

 

·     Brady Energy

After adjusting for the impact of acquisitions revenues remained flat, whilst contribution increased by £0.5 million as the business continues to improve efficiency.

 

·     Brady Recycling

After adjusting for the impact of acquisitions revenues declined by £0.5 million from £2.4 million to £1.9 million.  Contribution declined from £0.4 million to £0.2 million.

Group Margin

The gross margin for the first half of 2016 decreased to 62 per cent compared to 65 per cent for the first half of 2015.  This reflects the fall in higher margin Licence sales to £1.5 million from £2.9 million. 

 

Cash Costs

 

Following the cost reduction programme at the end of 2015 cash costs in the six months to 30 June 2016 have been reduced by £1.6 million.  The reconciliation of this to the interim results (before Exceptional items) is shown below:

 

2016 Cash cost reconciliation





2016


2015


£'000


£'000





Total Costs in profit and loss account

14,635


14,495





Cost base of acquisitions

1,358


-

Amortisation and depreciation

1,920


1,573

Share option costs

88


69

Cash costs on comparable basis

11,269


12,853





Reduction in cash costs

1,584


-

 

 

Selling and Administrative Costs

Selling and administrative costs reduced to £9.0 million from £9.6 million in the same period last year as a result of the cost cutting initiative.

 

Research and development expenditure represented 23 per cent (£3.4 million) of the Group's revenues in the first half of 2016 compared to 25 per cent (£3.5 million) in the first half of 2015. This is in line with the Group's commitment to ensuring that its product offering is maintained and up-to-date. Of the above research and development cost, £0.8 million was capitalised (2015 - £1.1 million).

 

Profitability

Profit before taxation for the first half of 2016 was £0.1 million compared to a loss before taxation of £0.4 million for the first half of 2015.

 

EBITDA for the first half of 2016 was £2.0 million compared to £1.2 million for the first half of 2015. The EBITDA margin for the first half of 2016 was 14 per cent compared to 8 per cent for the first half of 2015.

 

Basic earnings per share for the first half of 2016 was (0.32) pence per share compared to an EPS of (0.53) pence per share for the first half of 2015. Adjusted EPS improved to 1.05 pence from 0.53 pence in 2015.

 

Balance Sheet

The balance sheet continues to be dominated by goodwill and other intangible assets, largely as a natural consequence of the completion of acquisitions in previous years. As the majority of acquisitions were denominated in foreign currency, most have increased in carrying value between balance sheet dates, there has been a combined increase in carrying value of £3.0 million since 31 December 2015 of which £0.4 million relates to the acquisition of Energy Credit and the rest relates to foreign exchange.

 

The Group continues to enjoy a strong balance sheet with net cash balances at 30 June 2016 of £6.4 million (H1 2015: £6.2 million).

 

 

Cash Flow

Cash inflow from operations in H1 2016 was £1.0 million compared to a cash outflow of £1.0 million for the same period in 2015.

 

Investing activities consisted of capitalised development £0.8 million (H1 2015: £1.1m), fixed asset purchases of £0.3 million (H1 2015: £0.3m), and the acquisition of Energy Credit £0.3 million (H1: 2015 £nil). 

 

 

 

 

 

 

 


Consolidated interim statement of comprehensive income









For the six months ended 30 June 2016









 

 

 

 

 

 


 

 

Before exceptional

Six months to 30 Jun 2016 (unaudited)

 

Exceptional item

Six months to 30 Jun 2016

(unaudited)

 

 

Six months to 30 Jun 2016 (unaudited)

 

 

Six months to 30 Jun 2015 (unaudited)

 

Before exceptional items Twelve months to 31 Dec

2015

 

Exceptional item Twelve months to 31 Dec

2015

 

 

 

 

Twelve months to 31 Dec2015


Notes

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

4

14,758

-

14,758

14,106

27,374

-

27,374

Cost of sales


(5,638)

-

(5,638)

(4,915)

(10,867)

-

(10,867)

Gross profit


9,120

-

9,120

9,191

16,507

-

16,507

Selling and administrative expenses


(8,997)

(251)

(9,248)

(9,580)

(17,466)

(469)

(17,935)

Operating result


123

(251)

(128)

(389)

(959)

(469)

(1,428)

Finance income


6


6

26

31

-

31

Profit/(Loss) for the period before taxation


129

(251)

(122)

(363)

(928)

(469)

(1,397)

Income tax expense


(141)

-

(141)

(71)

(329)

-

(329)

Loss for the period attributable to shareholders of Brady plc


(12)

(251)

(263)

(434)

(1,257)

(469)

(1,726)

Other comprehensive income









Exchange differences on translation of foreign operations


3,997

-

3,997

(1,816)

(2,117)

-

(2,117)

Movement in actuarial valuation of defined benefit pension schemes


(1,359)


(1,359)

(286)

(235)

-

(235)

Total other comprehensive income


2,638

-

2,638

(2,102)

(2,352)

-

(2,352)

Total comprehensive income for the period


2,626

(251)

2,375

(2,536)

(3,609)

(469)

(4,078)

EBITDA


2,043

(251)

           1,792

1,184

2,450

(469)

1,981










Earnings per share (pence)

7








Basic


(0.01)


(0.32)

(0.53)

(1.52)


(2.09)

 

All of the above relate to continuing operations.


 


Consolidated interim statement of financial position                                                                                

30 June 2016

                                                                                                                                                                                         



30 Jun 2016 (unaudited)

30 Jun 2015

(unaudited)

 

31 Dec 2015


Notes

£'000

£'000

£'000

Assets





Non-current assets





Goodwill

10

20,178

16,724

17,178

Other intangible assets

11

14,215

12,689

12,653

Deferred tax asset


555

505

483

Property, plant and equipment


1,202

991

1,147



36,150

30,909

31,461

Current assets





Trade and other receivables


6,036

6,493

5,657

Accrued income


2,276

1,829

1,382

Cash and cash equivalents

12

6,402

6,197

6,594



14,714

14,519

13,633






Total assets


50,864

45,428

45,094






Equity





Share capital


830

833

830

Treasury shares


(3)

(3)

(3)

Share premium account


37,077

37,025

37,053

Merger reserve


680

680

680

Merger relief reserve


530

530

530

Equity reserve


920

612

832

Foreign exchange reserve


(5,346)

(9,042)

(9,343)

Capital reserve


4

1

4

Retained earnings


(2,729)

429

(1,107)

Total equity


31,963

31,065

29,476






Liabilities





Current liabilities





Trade and other payables


3,949

3,593

4,588

Deferred income


7,214

5,210

5,394

Current tax payable


940

593

822



12,103

9,396

10,804






Non-current liabilities





Deferred tax liabilities


2,854

2,571

2,606

Pension obligations


3,944

2,396

2,208



6,798

4,967

4,814

Total liabilities


18,901

14,363

15,618






Total equity and liabilities


50,864

45,428

45,094







Consolidated interim statement of changes in equity                                                                                                                                       

30 June 2016                             

                                                                                                                                                                                                                                                                                                            


 

Share capital

 

Treasury shares

Share premium account

 

Merger reserve

Merger relief reserve

 

Equity reserve

Foreign exchange reserve

 

Capital reserve

 

Retained earnings

 

Total equity

Equity attributable to equity holders of Brady plc:

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2015

817

(3)

36,350

680

530

890

(7,226)

1

2,327

34,366

   Dividends

-

-

-

-

-

-

-

-

(1,525)

(1,525)

   Increase in equity reserve in relation to options issued

-

-

-

-

-

69

-

-

-

69

   Exercise and cancellation of options

-

-

-

-

-

(347)

-

-

347

-

   Allotment of shares following exercise of options

16

-

675

-

-

-

-

-

-

691

Transactions with owners

16

-

675

-

-

(278)

-

-

(1,178)

(765)

Profit for the period

-

-

-

-

-

-

-

-

(434)

(434)

Other comprehensive income:











   Movement in actuarial valuation of defined benefit pension plan

-

-

-

-

-

-

-

-

(286)

(286)

   Exchange difference on translation of foreign operations

-

-

-

-

-

-

(1,816)

-

-

(1,816)

Total comprehensive income for the period

-

-

-

-

-

-

(1,816)

-

(720)

(2,536)

Balance at 30 June 2015

833

(3)

37,025

680

530

612

(9,042)

1

429

31,065

   Increase in equity reserve in relation to options issued

-

-

-

-

-

174

-

-

-

174

   Exercise and cancellation of options

-

-

-

-

-

46

-

-

(46)

-

   Allotment of shares

-

-

28

-

-

-

-

-

-

28

   Purchase of own shares

(3)

-

-

-

-

-

-

3

(250)

(250)

Transactions with owners

(3)

-

28

-

-

220

-

3

(296)

(48)

Loss for the period

-

-

-

-

-

-

-

-

(1,292])

(1,292)

Other comprehensive income:











   Movement in actuarial valuations of defined benefit pension plan

-

-

-

-

-

-

-

-

51

51

   Exchange difference on translation of foreign operations

-

-

-

-

-

-

(301)

-

-

(301)

Total comprehensive income for the period

-

-

-

-

-

-

(301)

-

(1,241)

(1,241)

Balance at 31 December 2015

830

(3)

37,053

680

530

832

(9,343)

4

(1,107)

29,476

   Dividends

-

-

-

-

-

-

-

-

-

-

   Allotment of shares following exercise of options



24







24

   Increase in equity reserve in relation to options issued

-

-


-

-

88

-

-

-

88

Transactions with owners

-

-

24

-

-

88

-

-

-

112

Loss for the period

-

-

-

-

-

-

-

-

(263)

(263)

Other comprehensive income:











   Movement in actuarial valuation of defined benefit pension plan

-

-

-

-

-

-

-

-

(1,359)

(1,359)

   Exchange difference on translation of foreign operations

-

-

-

-

-

-

3,997

-

-

3,997

Total comprehensive income for the period

-

-

-

-

-

-

-

-

(1,622)

2,638

Balance at 30 June 2016

830

(3)

37,077

680

530

920

(5,346)

4

(2,729)

31,963


 

Consolidated interim statement of cash flows




For the six months ended 30 June 2016







Six months to 30 Jun 2016 (unaudited)

Six months to

30 Jun 2015 (unaudited)

 

 

2015



£'000

£'000

£'000

Operating activities





Loss for the period before exceptional items


(12)

(434)

(1,257)

Exceptional items


(251)

-

(469)

Loss for the period


(263)

(434)

(1,726)

Depreciation of property, plant and equipment


318

279

582

Amortisation of intangible assets


            1,602

1,294

2,827

Interest receivable


(5)

(26)

(31)

Loss on disposal of property, plant and equipment


6

-

-

Tax charge


141

71

329

Employee equity settled share options


88

69

243

Changes in trade and other receivables


545

(1,223)

414

Changes in trade and other payables


          (1,316)

(1,012)

(275)

Taxes paid


(163)

-

(416)

Net cash inflow from operating activities


953

(982)

1,947






Investing activities





Acquisition of ScrapRunner


-

-

(1,186)

Cash payments property, plant and equipment


(268)

(252)

(624)

Cash payments on capitalised development


(782)

(1,093)

(1,967)

Acquisition of Energy Credit (Net of Cash Acquired)


(327)

-

-

Interest received


5

26

31

Net cash outflow from investing activities


(1,372)

(1,319)

(3,746)






Financing activities





Proceeds from other share issues


24

691

719

Share buy back


-

-

(250)

Dividends paid


-

(1,525)

(1,524)

Net cash outflow from financing activities


24

(834)

(1,055)






Net changes in cash and cash equivalents


(395)

(3,135)

(2,854)

Cash and cash equivalents, beginning of period


6,594

9,580

9,580

Exchange differences on cash and cash equivalents


203

(248)

(132)

Cash and cash equivalents, end of period


6,402

6,197

6,594



Selected explanatory notes

 

 

1.  Nature of operations and general information

Brady plc and its subsidiaries' principal activity is the provision of trading, risk management and settlement solutions to the energy, metals, recycling and soft commodities industries, through the delivery of client focused software and services. 

The Group provides the leading trading and risk management software for global commodity markets. The Group provides a complete integrated solution supporting entire commodities trading operations.

Brady plc, a public limited liability company, is the Group's ultimate parent company. It is registered in England and Wales. The address of Brady plc's registered office is Riverside House, 7th Floor, 2A Southwark Bridge Road, London, SE1 9HA.

These condensed consolidated interim financial statements have been prepared using the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union and as issued by the International Accounting Standards Board. They do not include all of the information required for full annual financial statements as defined in Section 434 of the Companies Act 2006 and should be read in conjunction with the Consolidated Financial Statements of the Group as at and for the year ended 31 December 2015. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006. The consolidated financial statements have been filed with the Registrar of Companies and are available on the Group's website, www.bradyplc.com.

Brady plc's shares are listed on the London Stock Exchange's AIM. Brady plc's consolidated interim financial statements are presented in British pounds (£), which is also the functional currency of the ultimate parent company.

2.  Accounting policies

The accounting policies applied by the Group are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2015.

 

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

 

3.  Critical accounting judgements and key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimating uncertainty at the reporting date, that have a risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial period are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2015.



4.  Segment analysis reporting

 

Operating Segments

 

In accordance with IFRS 8, "Operating Segments", information for the Group's business units has been derived using the information used by the chief operating decision maker. The Executive Directors have been identified as the chief operating decision makers and the Board is responsible for the allocation of resources to business units and assessing their performance. The Group is organised into three business units comprising different market sectors within the ECTRM market and each business unit is able to operate globally. The three business units are Commodities, Energy and Recycling. The profit measure used by the Board is business unit contribution, which is operating profit for the business unit before the allocation of central and shared expenses, the amortisation of acquired intangible assets, interest income, interest expense and before exceptional items and taxation.

 

The tables below show an analysis of the results by operating segment:

 

 

 

Six months to 30 Jun 2016

Revenues

Six months to 30 Jun 2016

Contribution

Six months to 30 Jun 2015

Revenues

Six months to 30 Jun 2015

Contribution

 

 

2015

Revenues

2015 Contribution


£'000

£'000

£'000

£'000

£'000

£'000








Commodities business unit

6,004

1,611

6,129

1,646

12,414

3,662

Energy business unit

6,466

1,445

5,572

934

10,738

2,779

Recycling business unit

2,288

237

2,405

409

4,222

70


14,758

3,293

14,106

2,989

27,374

6,511

Amortisation of acquired intangibles


(830)


(806)


(1,640)

Central and shared costs


(2,340)


(2,572)


(5,830)

Operating result before exceptional items


123


(389)


(959)








Add back:







Depreciation


318


279


582

Amortisation of capitalised development


772


488


1,187

Amortisation of acquired intangibles


830


806


1,640

EBITDA


2,043


1,184


2,450

 

Revenue by Geography

 

An analysis of sales revenue by geographical market is given below:


Six months to

30 Jun 2016 (unaudited)

Six months to

30 Jun 2015 (unaudited)

 

 

2015


£'000

£'000

£'000





EMEA

9,906

10,231

19,750

Americas

4,208

3,415

6,230

APAC

644

460

1,394


14,758

14,106

27,374

 

The Group generates revenue from software licence sales, recurring support and maintenance and rental fees and the provision of associated consulting and development services. Revenues can be analysed as below:

 

 


Six months to

30 Jun 2016 (unaudited)

Six months to

30 Jun 2016 (unaudited)

 

 

2015


£'000

£'000

£'000





Software licence sales

1,514

2,871

5,185

Recurring support and maintenance and rental revenues

8,914

7,799

15,249

Service fees including development

4,330

3,436

6,940


14,758

14,106

27,374

 

5.  Share issues

 

The Company made various allotments of ordinary 1 pence shares during the period on the exercise of various share options. This increased the Company's ordinary shares issued and fully paid at the end of the period by 50,000 (year ended 31 December 2015: 1,637,003).

 

6.  Share buyback

 

During the period under review, the number of ordinary shares held in treasury has remained at 4,306.

 

7.  Earnings per share

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Brady plc divided by the weighted average number of shares in issue during the period. All earnings per share calculations relate to continuing operations of the Group. Separate calculations have been prepared related to the profit before and after exceptional items.


Profits/(loss) attributable to shareholders

£'000

 

Weighted average number of shares

Basic earnings per share amount in pence





Six months ended 30 June 2016

(263)

83,011,302

(0.32)

Six months ended 30 June 2016 before exceptional items

(12)

83,011,302

(0.01)

Six months ended 30 June 2015

(434)

82,226,920

(0.53)

Year ended 31 December 2015 before exceptional




items

(1,257)

82,704,721

(1.52)

Year ended 31 December 2015

(1,726)

82,704,721

(2.09)

 



 

As there was a loss after tax for the six months ended June 2016 and the year ended December 2015, there was no dilutive effect.

The calculation of the adjusted earnings per share, as calculated by external analysts, is based on the profit after tax adjusted for acquired intangible assets amortisation, share based compensation, exceptional items and normalised tax and is calculated as follows:


Six months to

30 Jun 2016 (unaudited)

Six months to

30 Jun 2015 (unaudited)

 

 

2015


£'000

£'000

£'000





Loss for the year

(263)

(434)

(1,726)

Add back:




   Exceptional items

251

-

469

   Amortisation of acquired intangibles

840

806

1,640

   Share based compensation

88

68

243

   Tax charge

141

71

329

Deduct:




   Normalised tax at 15% (2015: 15%)

(182)

(77)

(142)

Adjusted profit

875

434

813

 


Adjusted profits attributable to shareholders

£'000

Weighted average number of shares

Basic adjusted earnings per share amount in pence





Six months ended 30 June 2016

875

83,011,302

1.05

Six months ended 30 June 2015

434

82,226,920

0.53

Year ended 31 December 2015

813

82,704,721

0.98





 

 

8.   Dividends

 

During the period Brady plc paid dividends of £Nil to its equity shareholders (period ended 30 June 2015: £1,525,000).

 

 



 

9.   Exceptional Items

 

The table below shows the exceptional costs incurred during the period.


Six months

30 Jun 2016 (unaudited)

Six months

30 Jun 2015 (unaudited)

  

 

            2015


£'000

£'000

£'000

Acquisition costs in relation to energycredit

251

-

-





Reorganisation costs

-

-

347





Acquisition costs in relation to ScrapRunner

-

-

122


251

-

469

 

 

10.  Goodwill

 

The net carrying amount of Group goodwill can be analysed as follows:


Goodwill on consolidation

Purchased goodwill

Total


£'000

£'000

£'000





Gross carrying amount

23,081

90

23,171

Provisional Goodwill on energycredit

424

-

424

Accumulated impairment

(3,327)

(90)

(3,417)

Carrying amount at 30 June 2016

20,178

-

20,178





Gross carrying amount

20,570

90

20,660

Accumulated impairment

(3,392)

(90)

(3,482)

Carrying amount at 31 December 2015

17,178

-

17,178

 

There were no changes in the net carrying amount of purchased goodwill. Changes in the net carrying amount of goodwill on consolidation can be summarised as follows:


Total


£'000



Carrying amount at 1 January 2016

17,178

Provisional Goodwill on energycredit

424

Foreign exchange movement on retranslation

2,576

Carrying amount at 30 June 2016

20,178

 



 

11.  Other intangible assets

 

Intangible assets comprise the following:


   

 30 Jun 2016 (unaudited)

 

30 Jun 2015 (unaudited)

 

 

31 Dec 2015


£'000

£'000

£'000





Capitalised development

6,179

5,815

6,019

Acquired software

5,084

4,837

4,399

Acquired customer contracts

2,952

2,037

2,235


14,215

12,689

12,653

 

The carrying value of intangible assets at 30 June 2016 can be split into the following cash generating units:

 

 

Capitalised development

costs

Acquired

software

Acquired

customer

contracts

Total


£'000 

£'000

£'000 

£'000






Commodities business unit

3,435

943

790

5,168

Energy business unit

2,185

2,894

1,713

6,792

Recycling business unit

559

1,247

449

2,255

Carrying amount at 30 June 2016

6,179

5,084

2,952

14,215

 

 

Changes in the net carrying amount of Group intangible assets can be summarised as follows: 

 

 

 

 

Capitalised development

costs

 

 

 

Acquired

software

 

 

Acquired

customer

contracts

Total


£'000 

£'000

£'000 

£'000






Carrying amount at 1 January 2016

6,019

4,399

2,235

12,653

Additions in the period

782

372

-

1,154

Amortisation in the period

(772)

(592)

(238)

(1,602)

Forex movement on retranslation

150

905

955

2,010

Carrying amount at 30 June 2016

6,179

5,084

2,952

14,215

 

 

12.  Cash and cash equivalents

 

Cash and cash equivalents comprise the following:


30 Jun 2016

unaudited

 

30 Jun 2015

Unaudited

31 Dec 2015


£'000

£'000

£'000





Cash and cash equivalents

6,402

6,197

6,594

 

13.   Financial statements

 

The financial information for the year ended 31 December 2015 included in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory accounts for the year ended 31 December 2015 have been filed with the Registrar of Companies. This statement can be obtained from the Company's registered office at Riverside House, 7th Floor, 2A Southwark Bridge Road, London, SE1 9HA and will be available on the Company's website www.bradyplc.com.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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