FY15 profits in line, cash comfortably
Brady (L:BRDY) FY15 trading was in line with expectations, which were revised downwards in late November due to lengthening sales cycles, relating to the deteriorating market conditions in the commodity sector. The group retains a strong balance sheet with year-end cash comfortably ahead of expectations at £6.5m (we forecast £5.0m). The shares have made a partial recovery in recent weeks on the back of four licence wins and an interesting small acquisition. The licence wins show Brady can still win new business despite the ongoing turmoil in the commodity markets, as participants require the modern software for their business processes.
Trading update: Four licence wins since last update
Brady says FY15 results are expected to be in line with market forecasts. Cash was ahead of expectations mainly due to several customers paying ahead of what had been anticipated. Four new term licence deals have been announced since the November trading update – they are broadly of average size and all were recognised as revenue in FY15. The new deals provide trading and risk solutions across a range of asset classes – metals & concentrates, cotton and energy, and include a cloud-based deal for a recently founded Switzerland-based company. In November, Brady said it would cut its annual costs by £1.7m (we assumed restructuring costs of £0.5m) - these cost initiatives have already been completed.