TIDMBRY
RNS Number : 8918C
Brady plc
25 January 2018
Thursday 25 January
Brady PLC
("Brady", the "Company" or the "Group")
Trading Statement and disposal of US recycling business
Brady plc (AIM: BRY), the leading global provider of energy,
commodity and recycling software, provides the following trading
update for the full year 2017.
Transition to recurring revenue agreements
During 2017 the Group continued to focus on its transition from
a one-off licence model to a recurring revenue model, with a view
to improving earnings visibility and facilitating the Group in
delivering sustainable growth. The Board is pleased to report that
in 2017 recurring revenues represented 67% of total sales.
Over the course of 2017 the Board took the strategic decision,
where possible, to renew contracts on a recurring basis and
accordingly during the year the Board elected to replace GBP1.7m of
one-off licence revenues, with rolling agreements providing
recurring licence revenues, with an annual value of GBP0.8m for an
initial five-year term and rolling annually thereafter.
The Group expects to recognise revenue, in the amount of
approximately GBP0.8m, for work performed on two existing customer
contracts in 2017 during H1 2018 rather than in FY 2017.
Work has continued on the restructuring of the business in order
to better integrate the service offerings, resulting in exceptional
costs of approximately GBP2.0m. The Board expects to report revenue
for the year ended 31 December 2017 of approximately GBP27m and to
report adjusted EBITDA(1) in the range of GBP0.5m to GBP0.7m.
Net cash as at 31 December 2017 was GBP4.4m (2016: GBP7.3m).
Disposal of US recycling business
The Board is pleased to announce that following its review of
the Group's strategic plan it has, today, disposed of its non-core
US recycling business, for a maximum cash consideration of GBP4.6m
(US$6.5m) to AMCS Group (the "Disposal").
The Disposal will enable the Company to focus its efforts on
supplying its market-leading software and services to the energy
and commodity sectors and further streamlines the Group.
Under the terms of the sale agreement, AMCS Group has agreed to
acquire the entire share capital of Brady US Holdings Inc and
Systems Alternative International LLC (together the "Recycling
Business") for a maximum consideration of GBP4.6m.
The Group is to receive gross proceeds of up to GBP4.6m less an
adjustment for any excess of current liabilities over current
assets as determined in the completion accounts (this is estimated
to be approximately GBP0.3m). Brady is to receive approximately
GBP3.6m ($5m) in upfront cash payments, with the balance payable in
18 months following completion.
For the year ended 31 December 2016, the Recycling Business
generated revenues of GBP4.9m and operating profit of GBP0.8m
(unaudited operating profit for 2017 is expected to be
GBP0.3m).
In the latest notified balance sheet for the Group at 30 June
2017, the unaudited gross assets of the Recycling Business were
GBP10.7m and net liabilities were GBP1.0m. The value of the
Recycling Business' unaudited net assets at 31 December 2017 was
GBP6.4m, including intangible assets attributable to the Recycling
Business of GBP4.6m.
The upfront cash proceeds from the Disposal will strengthen the
Company's balance sheet and, combined with the Group's net cash as
at 31 December 2017, means Brady will have approximately GBP8m of
cash on its balance sheet.
Ian Jenks, executive chairman of Brady, said:
"The Group has substantially achieved the transition of its
business to a recurring revenue model. This has inevitably impacted
short-term performance. However, the Board is confident that the
business is well positioned for sustainable, long-term predictable
growth.
"The sale of our US recycling business means Brady will now have
approximately GBP8m in cash on the balance sheet and that the
business is well funded to continue its strategy of moving to a
recurring revenue model and investing in our continued product
leadership."
Full details of the Group's financial performance for the period
will be provided in the Preliminary Results, which are expected to
be announced in March 2018.
Footnotes
1. Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) is EBITDA before exceptional items
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information please contact:
Brady plc
Ian Jenks, Executive Chairman
Martin Thorneycroft, Chief +44 (0)1223
Financial Officer 479479
Cenkos Securities plc
Camilla Hume +44 (0)20
Mark Connelly 7397 8900
Redleaf Communications
Charlie Geller +44 (0)20 7382
Ian Silvera 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, back office financials and
treasury settlement, for energy, refined and unrefined, soft
commodities and agriculturals.
Brady has 30 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, 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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