Interim Results

 9 September 2014

Brady PLC

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

INTERIM RESULTS

For the six months to 30 June 2014

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 2014.

Operational Highlights:

· Ten significant new licence sales signed in first half of the year (H1 2013: six).

· The Energy business unit has made substantial progress in signing seven deals in the period, including the migration of three clients to the go-forward platform.

· The Commodities business focused on delivering its significant projects and recognising its backlog revenue.

· The Recycling business unit increased revenues by 37%, signed three new customers and delivered two major projects.

· A total of 10 new client installations and go-lives.

· EBITDA margin for the first half of 2014 was 19% (H1 2013: 9%).

Financial Highlights:

· Revenues up 5% to £15.6 million (H1 2013: £14.9 million). At consistent currency rates 1 revenues up 12% to £16.7 million (H1 2013: £14.9 million).

· Adjusted EPS up 174% to a record 2.49p per share (2013: 0.91 pence).

· EBITDA up 131% to £3.0 million (H1 2013: £1.3 million).

· PBT up to £1.5 million (2013: loss £0.1 million).

· PAT up to £1.1 million (2013: loss £0.1 million).

· £6.0 million of net cash as of 30 June 2014 (H1 2013: £5.7 million) and no debt.

Financial Summary:

No exceptional items in H1-2014 or H1-2013

1 Consistent currency numbers are calculated by translating the 2014 interim results at the same exchange rates as those used in the 2013 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.

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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 25 years' expertise in the commodity markets with some 300 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.comBrady plc: Twitter/Facebook/LinkedIn

CHAIRMAN'S STATEMENT

The Group has delivered substantial earnings growth in the first half of 2014 and is in line with management expectations for the full year. This has been achieved against a backdrop of challenging market conditions for commodities, energy and scrap metals globally. The strong performance is a result of major contracts signed in 2013 and tight cost control. The Group continues to increase the number of contract signatures and demonstrate its ability to deliver those major contracts around the world.

The Group has signed significant new licence sales in the first half of 2014, reporting an increase over last year. From these new licence sales, 35% originated outside of Europe, underpinning the continued international expansion of the Group's activities. Of particular note is the pick-up in the Energy business. Having successfully integrated, reorganised and rationalised the business in 2013, the Energy team has delivered a number of new contract signatures and migrations to the go-forward platform. This gives positive momentum to licence and service revenues for the rest of 2014 and beyond. With a number of contracts in advanced stages of negotiation, the Group's focus is to secure these licences and continue to deliver the backlog of projects and revenue that has already been agreed.

The fundamentals remain strong. The global ECTRM market for the commodity, energy and recycling sectors is estimated to be worth over $1.5 billion annually and Brady is securing an increasing share of the global market.

Brady plc has more than 50% recurring revenues, a strong licence backlog and increasing demand for services and development to support our new and existing clients. The Group continues to have a strong balance sheet, with a healthy cash position, no debt and a progressive dividend policy.

I would like to thank all directors and employees for their hard work and commitment during a very busy first half.

Strategy and Operations

The Group's strategy is to retain and strengthen its position as the largest European software company providing trading, risk management, settlement and logistics solutions to the global energy, metals, recycling and soft commodity markets.

Brady is signing and delivering larger licence agreements with some of the biggest names in the industry. Furthermore, the customer footprint continues to broaden, with a substantial amount of new business coming from outside of Europe. The Group signed its first deal in Korea, which was managed entirely by the APAC team.

In 2013 Brady streamlined the organisation by compressing the internal structure to three operating lines from four, retiring three legacy solutions and removing overhead. This has led to a significantly lower cost base in 2014, without affecting our ability to sell or deliver.

Brady Energy restructured in 2013 and is now securing new business. This ensures that Brady is now seeing growth across the Group.

Brady continues to look for synergies across the Group by:

· employing skills from across the Group to develop a Cloud and risk solution for the recycling market

· cross-selling Brady solutions into the enlarged customer base

· reusing technology across the Group, for example cloud and web deployment

· sharing service and development resources across the Group

· using the extended sales team to explore recycling deals outside of the Americas

Paul Fullagar

Chairman

CHIEF EXECUTIVE'S REVIEW

Earnings per share increased 174% in the first half thanks to contract delivery and firm cost control. Brady signed substantial new licence agreements in 2013, including two record deals, and is now recognising revenue from those contracts. The cost saving exercise implemented in 2013 is also now flowing into the results.

Brady Energy had a very encouraging first half, signing seven significant contracts. Three of these deals have been clients migrating from legacy solutions to the go-forward platform. The system rationalisation means a substantially lower development cost base as duplications have been removed.

Brady Recycling signed a significant deal with the largest recycling company in Canada further strengthening its market leading position in North America. Brady Recycling now provides the principal processing solution to six of the top ten American recyclers. Brady Hedge Manager for Scrap Traders has been successfully launched, offering recycling companies a solution to manage their hedging risk.

Brady is recognised as the world leader in the metals trading market, and our position was further endorsed by the Group signing business with a major Korean company.

Having signed ten deals, compared with six this time last year, we are taking strong sales momentum into the second half of the year. Brady is in negotiation for several major contracts and anticipates a strong second half in a business that is traditionally second half weighted.

Group Technology

In view of the significant pressure from regulators globally, Brady has developed an EMIR regulatory reporting engine which has been successfully sold to four energy clients. The solution has been developed so that it can be deployed across the Brady Group offerings or alongside other trading solutions. It is product-agnostic, can be easily extended to cover other regulatory reporting requirements and is built with Brady's latest SOA technology. This technology allows clients to use the software at their offices or connect to it online as a Cloud service.

Brady sees growing demand for Cloud services and has signed its first Energy Cloud client.

The Group has also launched a new Hedge Management solution to provide hedging and risk management solutions for metals, recycling and agricultural commodities. This is also delivered as an online Cloud service, vastly reducing the costs associated with accessing these solutions.

Brady Commodities

Brady Commodities signed a number of high value contracts in Q4 2013 and has focused heavily on delivery against both these and pre-existing major projects during the first half of the year in both metals and agricultural commodities. Three new customers went live, including a major US client that signed in Q4 2013 and went into full production just four months later.

Substantial enhancements to the solution have been made, including the Brady Metals Warehouse Management system, modifications in preparation for the 22 September launch of LME Clear, the London Metal Exchange's new EMIR compliant clearing house, as well as a major strategic initiative focused on the integration of metals raw materials functionality into our physical trading solution. Upon completion Brady will have a unique single solution for raw materials, scrap, refined metals and derivatives trading.

A number of new hires have been made in our pre-sales and professional services teams to meet demand from the growth in our business. This enables the regions to become more autonomous, as seen in the Korean metals deal which was completely managed by our Asian office, showing the increased strength of our localised sales and delivery capability.

Brady Energy

In H1 2014 Brady Energy started to see the benefits of the integration strategy, the increased focus and streamlining of its offering and the reorganisation completed in 2013.

Brady Energy signed seven significant contracts in H1 2014 and two of these have already gone live. These include:

· An Irish trading company specialised in international power-related commodity trading, which uses Brady to support its European power scheduling operations.

· A multi-utility company in the Netherlands, which relies on Brady to fulfil its scheduling and capacity nomination requirements.

· An existing customer, which migrated to Brady Energy ETRM Cloud solution for its next generation power trading system.

· A Finnish electricity company, which selected the Brady ETRM and EMIR reporting tool to provide portfolio management services to its customers.

· An integrated energy company in the UK, which is receiving software delivery for its trading business.

· A large European gas provider, which opted for delivery of Brady software for its risk operations.

· A German clean energy supply company, which selected Brady Energy Scheduling and Balancing solution to ensure greater transparency and streamlining of its power scheduling activities.

Brady Energy rationalised the solution set in 2013, simplifying the offering and reducing costs. The strategy has been endorsed by three clients migrating from the legacy solution to the go-forward product, with further clients indicating their intent to migrate.

Brady Energy has signed three new clients for the Energy Data Management Web solution, which was co-developed with the largest energy supplier in Norway. The service gives clients their energy consumption and pricing online. The Group also signed a major deal with a leading European energy company to further support its gas trading functionality. Scheduling has been extended to include adapters for the Netherlands and Belgium, and Brady Energy now has a single solution for power and gas scheduling across the European market. With regulatory pressure continuing to be a major consideration in this sector, we licensed the EMIR reporting module to four major European energy companies.

The significant new business signed during this period will flow through into a pick-up in revenues in the second half.

Brady Recycling

New deals include American Iron and Metal, the largest recycling company in Canada, Hugo Neu for its new recycling facility in Puerto Rico, and United Scrap of Chicago.

The Recycling unit had a busy first half implementing its software at additional locations, as the recycling market continues to consolidate. Some of the companies that went live include eight individual sites at Tube City, five with new customer Allegheny Raw Materials, the first five installations at AIM, with both the top two US recycling companies each installing our software solution at five new locations.

At the major recycling convention in April we launched a new product, "Buyer Work Bench", for managing the procurement process for ores and coal. The CRES Recycling solution has been strengthened for all our clients dealing in complex multi-currency transactions and it broadens our ability to sell into the global market.

FINANCIAL RESULTS

Group Revenues

Revenues for the first half of 2014 were £15.6 million (H1 2013: £14.9 million). This represents organic growth of 5%. Currency exchange rates for the Norwegian Krone and the US dollar have changed materially between 30 June 2013 and 30 June 2014 with the average rate for both currencies weakening against the pound by 13% and 9% respectively. Overall exchange rate movements have reduced 2014 revenues by £1.1 million and reduced organic growth from 12% to 5%.

Revenue by type

* Consistent currency numbers are calculated by translating the 2014 interim results at the same exchange rates as those used in the 2013 interim consolidation.

Software licence sales grew by 72% compared to the same period last year. Backlog revenue (contracts signed in 2013 but revenue recognised in 2014) amounted to £1.9 million of the total software sales.

Recurring revenue for the period was £7.9 million (£8.6 million at consistent currency rates) compared to £8.5 million in the prior period, which is broadly flat year on year in underlying operations. Recurring revenues represent 51% of total sales (H1 2013: 57%). The major factor in the percentage decline was the increased level of licence sales which were expected to be high this year as a result of the level of backlog revenue.

Service and development fees were £4.1 million (£4.4 million at consistent currency rate) against £4.3 million last year.

Group Margin

The gross margin for the first half of 2014 increased to 64% compared to 63% for the first half of 2013.

Selling and Administrative Costs

Selling and administrative costs fell to £8.6 million from £9.5 million in the same period last year, and £0.5 million of this reduction was as a result of exchange rate movements. A further £0.4 million is a direct result of last year's cost reduction programme in the Energy business unit.

Research and development expenditure represented 24% (£3.7 million) of the Group's revenues in the first half of 2014 compared to 26% (£3.8 million) in the first half of 2013. 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, £0.7 million was capitalised (2013: £1.2 million).

Profitability

EBITDA for the first half of 2014 was £3.0 million compared to £1.3 million for the first half of 2013, an increase of 131%. The EBITDA margin for the first half of 2014 was 19% compared to 9% for the first half of 2013.

Profit before taxation for the first half of 2014 was £1.5 million compared to a loss before taxation of £0.1 million for the first half of 2013. Profit after taxation for the first half of 2014 was £1.1 million, compared to a loss of £0.1 million for the first half of 2013.

Adjusted earnings per share for the first half of 2014 were 2.49 pence compared to 0.91 pence for the first half of 2013, an increase of 174%. Basic earnings per share for the first half of 2014 were 1.32 pence per share compared to a negative EPS of 0.16 pence per share for the first half of 2013.

Operating Result by Business Unit

· Brady Commodities

Revenues increased by 18% to £7.1 million (£7.2 million at consistent currency rates) compared to £6.0 million in the comparative period. Contribution also improved to £2.9 million from £1.8 million (no significant exchange rate impact).

· Brady Energy

Revenues declined from £7.0 million in 2013 to £6.0 million in 2014. At consistent currency rates revenues reduced marginally to £6.8 million, split evenly between a reduction in service and development revenues and recurring revenues. Contribution also declined from £1.2 million to £0.8 million (no significant exchange rate impact).

· Brady Recycling

Revenues increased by 39% from £1.8 million in 2013 to £2.5 million in 2014 (to £2.7 million at consistent currency rates). Contribution also improved to £0.9 million from £0.2 million in the prior period (no significant exchange rate impact).

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. As the majority of acquisitions were denominated in foreign currencies, most of which have weakened significantly against sterling between balance sheet dates, there has been a combined reduction in carrying value of £1.2 million which has been charged to reserves.

The Group continues to enjoy a strong balance sheet with net cash balances at 30 June 2014 of £6.0 million (H1 2013: £5.7 million).

Provision has been made for an estimated deferred contingent consideration of £0.47 million in relation to the SAI acquisition. As any amount due will be settled within one year, it is carried in the balance sheet in current liabilities. Of the total amount, which will only be paid subject to the Brady Recycling business unit achieving revenue and profitability growth objectives for 2014, £0.31 million is anticipated to be settled in Brady plc shares and £0.16 million is anticipated to be settled in cash. Hence the Group had free net cash balances at 30 June 2013 of £5.85 million.

Cash Flow

The Group generated cash from operations of £1.1 million compared to £1.2 million in the first half of 2013. Brady has no debt.

Investing activities this year consisted solely of capitalised development and fixed asset purchases of £0.7 million and £0.3 million respectively compared to £1.2 million and £0.1 million in 2013. In 2013 deferred payments to purchase businesses of £0.8 million were also made.

The Group paid a dividend in May 2014 of £1.4 million, compared to £1.3 million paid in May 2013, an increase of 8%, continuing the trend of increasing dividends by 0.1 pence per share per year. Consistent with prior years, the Board is not recommending the payment of an interim dividend for 2014.

Market

Brady's revenues do not directly correlate to commodity and energy prices, whilst the volatility in the underlying prices creates opportunities for traders and consumers. The Group believes that the general rebound in the global economy has yet to be reflected in increased demand for commodities and energy. We have observed a stronger recovery in the USA, which we believe is further advanced in its economic rebound than Europe, and the Group remains optimistic that Europe should follow. Brady continues to expand its Asian business into new markets. The Group also recognises ongoing opportunities as a result of the further deregulation of the European energy market.

Brady believes that the ECTRM market spends over $1.5 billion annually on software. As the largest European software company with a growing global market share, the Group continues to see significant potential for further growth.

Outlook

The Group has demonstrated strong sales performance in the first half of 2014. Furthermore, delivering projects in the first half of 2014 has given substantial improvement in profits and positions the Group well for the full year.

For the second half, the Group still has a significant revenue backlog of contracts that have been signed but the revenue not yet recognised, which, when added to the new sales in the first half, underpins the remainder of 2014 and beyond.

The Group's tendency to secure the majority of new contracts in the second half appears to be trending again in 2014, with significant new licence opportunities in advanced discussions. We look forward to signing and announcing further business in the second half of the year. The Group remains committed to managing its expense base.

Gavin Lavelle, CEO of Brady plc, commented: "I am pleased with the performance from the team in the first half which has resulted in the delivery of very strong earnings growth and positioned us well for the second half of the year. The enthusiastic activity being demonstrated across all parts of the Group, delivering both growth and healthy margins, gives me every confidence that we are on track to perform in line with full year expectations. Of particular note, the Energy business has had a substantial pick-up in activity and that will be reflected in the second half results.

At Brady we are focused on successful delivery to our clients. I believe our reputation for quality, meeting deadlines and being within budget is growing worldwide. We are leaders in a number of important areas and continually look to extend this leadership. There is a substantial pipeline and I am looking forward to the second half with much enthusiasm."

Gavin Lavelle

Chief Executive

Consolidated interim statement of financial position

30 June 2014

Consolidated interim statement of changes in equity

30 June 2014

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 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE.

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 2013. 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 2013.

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 estimation 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 2013.

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:

Revenue by geography

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

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:

5. Share issues

The Company made various allotments of ordinary 1p 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 222,500 (year ended 31 December 2013: 475,572).

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.

The calculation of the diluted 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, as adjusted for dilutive share options. All earnings per share calculations relate to continuing operations of the Group. Separate calculations have been prepared related to the profit before and after the exceptional items.

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:

8. Dividends

During the period, Brady plc paid dividends of £1,378,918 to its equity shareholders (period ended 30 June 2013: £1,296,000).

9. Exceptional Items

There were no exceptional costs in the period. Exceptional costs in the period ended 31 December 2013 can be summarised as follows:

10. Goodwill

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

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:

11. Other intangible assets

Intangible assets comprise the following:

The carrying value of intangible assets at 30 June 2014 can be analysed as follows to the following cash generating units:

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

12. Cash and cash equivalents

Cash and cash equivalents comprise the following:

13. Financial statements

The financial information for the year ended 31 December 2013 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 2013 have been filed with the Registrar of Companies. This statement can be obtained from the Company's registered office at 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE and will be available on the Company's website www.bradyplc.com.