28th Sep 2005 06:00
INTERIM RESULTS For the six months to 30 June 2005 Brady plc, the international supplier of fully integrated software solutionsfor commodity trading and supply chain management, announces its interimresults for the six months to 30 June 2005.Trading Performance: * Revenue declined 21% at ‚£1,530,585 (2004: ‚£1,940,299) * (Loss)\profit before tax ‚£(268,537) (2004: profit ‚£823,300) * Loss per share of 0.80p per share (2004: earnings per share of 2.73p) * Cash balances ‚£4,268,592 (2004: ‚£5,503,571) Operations: * Completed the acquisition of Tradesoft BV in July. * Completed the integration of Colplan * Delivered Version 600 for client testing For further information please contact:Brady plc Graham Simister, Chairman Tel: 020 7351 0425 Robert Brady, Chief Executive Tel: 01223 479 479 A presentation for shareholders and analysts will be held at the offices ofOriel Securities Ltd., 125 Wood Street, London EV2V 7AN at 9.30am to-day. CHAIRMAN'S STATEMENT Business ReviewThough we achieved much in the first half of 2005, progress to date has beenslower than we had hoped for at the time of writing my statement in our AnnualReport for the year to December 2004.On the positive side we made some significant progress in a number of areas, inparticular: * we acquired Tradesoft, a Dutch specialist software company bringing add-on knowledge and a number of excellent clients such as Norilsk and Noranda without impactingon our net cash position; * added further customers through small sales of Opval products to Dresdner Bank and Rab Capital; and * continued to develop the core Trinity product. Encouraging as these developments are, our revenues and profits for the yearare highly dependent on new Trinity licence sales and as reported in ourtrading update in August we did not sign the major new Trinity licences we hadexpected to close in the first half. This is particularly disappointing giventhe large pipeline of sales leads we have developed. Delays to signingcontracts are frustrating but we supply a mission critical piece of softwareand the decision making process for such system changes within our clients areoften lengthy and complicated.The signing up of new clients is undoubtedly linked to the release of thelatest version of Trinity, called Trinity 600. We delivered the alpha versionof Trinity 600 on time in January of this year and the beta version in April.However late specification changes by one of our two lead Trinity 600 customersresulted in further feature requirements and a corresponding delay in the finalrelease. Testing of the beta version is ongoing and we had hoped to announcethat our first client was live on Trinity 600 around the end of the thirdquarter. There is likely to be a delay before we reach this point andshareholders should note that as we get closer to the year end our customersare likely to want to finish their year-end processes and go live in 2006rather than risk introducing a new system in November or December.Financial ResultsGroup turnover declined 21% to ‚£1,530,585 (2004: ‚£1,940,299) reflecting theabsence of new Trinity licence sales in the period referred to above.The loss before tax for the period was ‚£(268,537) compared to a profit beforetax of ‚£823,300 in the equivalent period last year. The decline is almostentirely due to the absence of new Trinity licence sales, given the inherenthigh margin on incremental licence sales. Although it is of coursedisappointing to report a loss it is worth noting that the majority of ourcosts are now covered by recurring revenue streams and we would hope that thisperiod's lack of new licence sales proves to be the exception.Our cash balance at the end of the period was ‚£4.3 million. OutlookSecond half trading has begun with two upgrades of Trinity 500 going live inJuly, one in August and another in September without problems. A major clientis undertaking a paid review of an Opval upgrade. We have signed modestadditional work with a major Tradesoft client and are in detailed discussionswith another about upgrading to Trinity.Our focus for the second half will be twofold: to get Trinity 600 live and wemust work to sign up contracts with the clients in our existing sales pipeline.These two issues are doubtless related. To ensure we address the issuesproperly Brian Collins, ex-CEO of Opval, will become Group Sales Director togive a new impetus to our sales effort whilst freeing up Dr Robert Brady's timeto focus on product quality and implementation.Graham SimisterChairman Consolidated Profit and Loss Account For the six months ended 30 June 2005 Six months Six months Year ended 30 June 2005 30 June 2004 31 Dec (unaudited) (unaudited) 2004 (audited) Notes ‚£ ‚£ ‚£ Turnover 2 1,530,585 1,940,299 4,832,440 Operating (loss)/profit (351,790) 792,001 1,780,478 Net interest receivable 83,253 31,299 134,311 (Loss)\profit on ordinary (268,537) 823,300 1,914,789activities before taxation Tax on profit on ordinary 3 61,827 246,990 481,527activities (Loss)\profit on ordinary (206,710) 576,310 1,433,262activities after taxation (Loss)\profit for the period (206,710) 576,310 1,433,262 (Loss) earnings per share 4 (0.80)p 2.73p 6.13p Fully diluted (loss)\earnings per 4 (0.77)p 2.55p 5.83pshare Consolidated Balance Sheet For the six months ended 30 June 2005 Six months Six months Year ended 30 June 2005 30 June 2004 31 Dec 2004 (unaudited) (unaudited) (audited) ‚£ ‚£ ‚£ Fixed Assets Intangible assets 922,267 927,134 973,504 Tangible assets 142,546 123,351 129,085 Investments 15,027 15,027 15,027 1,079,840 1.065,512 1,117,616 Current Assets Debtors 1,433,955 745,690 1,524,374 Cash at bank and in hand 4,268,592 5,503,571 4,550,562 5,702,547 6,249,261 6,074,936 Creditors: amount falling due within one (1,064,644) (2,406,045) (1,298,599)year Net current assets 4,637,903 3,843,216 4,776,337 Total assets less current 5,717,743 4,908,728 5,893,953liabilities Provision for liabilities and (25,000) - (25,000)charges Net assets 5,692,743 4,908,728 5,868,953 Capital and Reserves Called up share capital 259,242 253,953 258,062 Share premium account 3,051,098 3,602,614 3,021,778 Merger reserve 680,000 - 680,000 Capital reserve 1,000 1,000 1,000 Profit and loss account 1,701,403 1,051,161 1,908,113 Equity shareholders' funds 5,692,743 4,908,728 5,868,953 Consolidated Cash Flow Statement For the six months ended 30 June 2005 Six months Six months Year ended 30 June 30 June 2004 31 Dec 2004 2005 (unaudited) (audited) (unaudited) Notes ‚£ ‚£ ‚£ Cash (outflow)\inflow from (341,051) 818,332 566,022operating activites Interest received 83,253 31,299 134,311 Taxation - - (2,374) Capital Expenditure (54,672) (41,468) (82,628) Acquisition - 581,246 (282,204) Cash (outflow)\inflow before (312,470) 1,389,409 333,127financing Financing Issue of share capital 30,500 2,760,699 2,864,224 Expenses in connection with share - (461,811) (462,063)issue Funds from capital raising 30,500 2,298,888 2,402,161 (Decrease)\increase in cash for the (281,970) 3,688,297 2,735,288period Reconciliation of net cash flow to movement in net funds (Decrease)\increase in cash for the (281,970) 3,688,297 2,735,288period Net funds at the beginning of the 4,550,562 1,815,274 1,815,274period Net funds at the end of the period 4,268,592 5,503,571 4,550,562 Reconciliation of operating profit to cash flow Six months Six months Year ended 30 June 30 June 2004 31 Dec 2004 2005 (unaudited) (audited) (unaudited) ‚£ ‚£ ‚£ Operating (loss)\profit (351,790) 792,001 1,780,478 Depreciation 41,211 34,815 70,182 Loss on sale of tangible assets - - 59 Amortisation of goodwill 51,237 - 51,237 Decrease\(increase) in debtors 90,419 (361,103) (1,192,404) (Decrease)\increase in creditors (172,128) 352,619 (143,530) Net cash (outflow)\inflow from (341,051) 818,332 566,022operating activities notes 1. Basis of preparation The interim financial information has been prepared in accordance withapplicable United Kingdom accounting standards and under the historical costconvention. The principal accounting policies are set out in the company's 2004statutory financial statements. The policies remain as stated in the annualreport for the year ended 31 December 2004.The financial information set out in this report does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. The figures forthe year ended 31 December 2004 have been extracted from the statutoryfinancial statements, which have been filed with the Registrar of Companies.The auditors' report on those financial statements was unqualified and did notcontain a statement under Section 240 of the Companies At 1985. The financialstatements for the six months ended 30 June 2005 and 30 June 2004 areun-audited.2. Segmental Analysis Six months 30 Six months 30 Year ended 31 June 2005 June 2004 Dec 2004 (unaudited) (unaudited) (audited) ‚£ ‚£ ‚£ By Destination United Kingdom 1,103,029 773,276 2,722,650 Rest of Europe 84,350 103,194 211,877 North America 239,782 951,671 1,680,279 Rest of World 103,425 112,158 217,634 1,530,585 1,940,299 4,832,4403. TaxationThe tax credit (2004: charge) for the six months June 2005 is calculated byapplying a tax rate of 30% (2004: 30%) to the estimated profits chargeable tocorporation tax for the period.4. (Loss)\earnings per ordinary shareThe calculation of the basic (loss)\earnings per share is based on the profits/losses attributable to ordinary shareholders divided by the weighted averagenumber of shares in issue during the period. (Loss)/profits Weighted average Basic (loss)\ attributable to number of shares earnings per ordinary shares share amount in pence Six months ended 30 June (206,710) 25,865,216 (0.80)2005 Six months ended 30 June 576,310 21,072,936 2.732004 Year ended 31 December 2004 1,433,262 23,370,477 6.13 During the period ended 30 June 2005, options existed which had theanti-dilutive effect of increasing the weighted average number of shares by1,134,033 to 26,940,249. The diluted loss per share for the period ended 30June 2005 was (0.77)p.The diluted profit per share for the period ended 30 June 2004 was 2.55p.The diluted profit per share for the year ended 31 December 2004 was 5.83p.5. Contingent liabilityThe company is in dispute with a client over a significant contract to supply amodified Trinity system. The dispute is at an early stage and the potentialimpact, if any, cannot be established. The directors, having taken legaladvice, believe at this stage the issues raised are without merit.6. DistributionThis statement will be sent to all shareholders and can be obtained from thecompany's registered office: 281 Cambridge Science Park, Milton Road,Cambridge, CB4 0WE. ENDBRADY PLCRelated Shares:
Brady