Brady Share Discussion Threads

[cyberian] 14/8/2009 13:21

Again the 125,000 purchase today reinforces the line that an Institution or two wants to buy reasonably big size for reasons that are fairly obvious and stated here by a number of posters. The company and its management appear to be in an excellent position and the latter a safe set of hands. With results due in early September we should see clear evidence of where thibgs stand and what further benefits are ahead. Guess anyone willing/needing to sell can do so with reasonable ease at current levels. The shares need a re-rating and there remains the chance of a speculative take-over with over 60% closely held.

[cyberian] 21/7/2009 14:38

Thanks marben100...have a copy of their last one dated 11/3/09...guess they are plodding along at the pace Edison had projected. However, the value of the last 2 contract wins may not be fully taken on-board and I understand that the maintenance contracts/renewals are running quite well. Again the Board recently said that revenues etc. are running as they had forecast. Hopefully they are being responsible and cautious on securing new contracts, but this is where further positive news may arise. Believe that the recent largish trades maybe related to an Institution pressing for shares at the 54p level so hopefully the share price should remain reasonably well supported at current levels. If the case surprised that no formal declarations given (maybe rules for AIM stocks is different) as stock must have come from some Directors. However, your broker may have approached you for some of your holding and/or another Institution holder has lightened up a bit? Finally with cash holding and Robert Brady switching to a non-Executive role the company's big shareholders could be tempted with an offer? Who knows, but believe the present Board have ability to run a bigger operation than Brady presents...they have integrity and perhaps are simply happy to eke-out a steady/rewarding growth strategy, and their ambitions are met?

[marben100] 21/7/2009 12:57

Edsion have an updated note on Brady out (13th July): . No change to previously published forecasts for 2009 or 2010.

Regards,

Mark

[dd776] 13/7/2009 08:48

good trding statement

[muttleyrules] 06/7/2009 08:48

And last two contracts will see some revenues recognised in second half of 09. This implies upgrades I would imagine given that 09 forecasts appear underpinned by last year's contracts. Consensus is 3.4p of EPS for 09 ... could easily become 5p and there could be more contracts. Cash pile set to grow further.

[cyberian] 06/7/2009 08:19

Nice new contract...wow, this time the company describe the revenues as "substantial"....certainly appears that the company maybe getting a roll going at last. Promising?

[cyberian] 01/7/2009 16:07

Decent buys at 54p but where is the supply coming from? Expecting good results for 1H in due course and some more contracts...the new broker may be helping re-vitalise interest in Brady as well. Thanks marben100 for your recent post.

[johnwall] 01/7/2009 07:55

Cheers Mark - you're generous in your marking :-))

New contract announced this morning -


No details given but this sounds positive -

This contract demonstrates Brady's ability to cross sell further applications
to its existing client base.

[marben100] 30/6/2009 23:11

Brady gets a mention in Barclays investor newsletter (received yesterday):

'Gareth Jones, Institutional Sales at Edison Investment, explains: "Smaller companies have higher risks than a well-established large company. They are often start-ups or are niche operators which means they are less able to diversify if sales in a business area dry up...

...Brady is the smallest company of Jones' top five picks. It is a software firm that helps mining companies to manage the risk associated with huge stockpiles of metals whose values can fluctuate over a large price range very rapidly.

"The metals market is about decade behind the equities market. And the regulators want real time price information so they can keep an eye on the risk profile of a particular company," says Jones. Brady is the market leader in this field and so will benefit from tighter regulatory demands. "The company also has a good cash reserve," he adds.'

5/10 ;0)

[cyberian] 25/6/2009 15:13

Agree marben100..let's hope that like busses they come in threes...or fours!

[marben100] 25/6/2009 13:39

I'd prefer to see some announcements of new contract wins. ;0)

[strollingmolby] 25/6/2009 10:46

Cheers, marben! I see BRY have RNS'd the Toyota contract going live today three days after putting it on their website, and lo and behold, up she pops. Hopefully they can learn from this and synchronise announcements in future?

[davidosh] 16/6/2009 17:01

It would have to be announced officially by RNS as you cannot move the chess pieces on the Board without letting the players know !!

[strollingmolby] 16/6/2009 16:56

16 June, 2009 12:30
Robert Brady moves to Non-Exec role

16 June 2009, London: Brady plc (BRY.L), the leading provider of trading, risk management and settlement solutions to the metals and commodities sectors, has announced today that Dr. Robert Brady, currently Chief Technology Officer, will become a non-executive director of the Company that he founded more than 24 years ago, with effect from 30 September 2009. Dr. Brady will remain a major shareholder in the company.

On his new role with the company Dr. Brady commented: "The company is ideally positioned to capitalise on the current global opportunities. The new management team shares our existing values - to understand the market, understand the client and provide the best solution through appropriate technology – and is taking us forward into a new phase of international growth. My position as a non-executive director will continue to keep me involved with the company and the reduced role will give me more time to devote to my passion for entrepreneurship in the UK. Specifically, I will be increasing my activity in the Cambridge area with non-competing technology start-ups."

Gavin Lavelle, CEO of Brady, said: "Robert has taken a one man consultancy and built the business into a strong public company, which is now a leading provider of trading and risk management technology solutions to the metals and commodity markets. This is a tremendous achievement by Robert and I am particularly pleased that we will continue to benefit from his continued participation and support in the future growth of the Company. I would also like to personally thank Robert for his unstinting support since I joined the company in 2007."

Dr. Brady began in 1985 developing pricing algorithms for the FX market, and by 1989 this had expanded to include swaps, interest rate derivatives and metal derivative risk management solutions. Within ten years the company had started to make a real name for itself in the metals and commodities markets. With the increase in capitalisation resulting from its UK AIM listing in 2004, Dr. Brady and his Board colleagues set about growing the company. 2007 saw a step change in this growth wth a number of senior new hires joining the Board, including CEO Gavin Lavelle. The management's determination to aggressively capitalise on growth opportunities has been clearly demonstrated in the progress made since then.

I'm not absolutely certain, but this kind of rings a bell - has this been announced before ? And should it be announced again?

[muttleyrules] 16/6/2009 15:23

Interesting ... sometimes a precursor to M&A, could be either offensive or defensive.

[cyberian] 08/6/2009 09:41

Replacement of Oriel as Broker by Cenkos is a positive move imho, as they are likely to be more pro-active and supportive. I know Paul Roy (New Smith), and the other board members have much experience and hopefully clout. Hoping to get some contract news soon.

[marben100] 14/5/2009 15:39

Yup, I shall be watching newsflow carefully & if sales announcements pick up & the share price is attractive, I would re-add.

[muttleyrules] 14/5/2009 11:36

Thanks for the comments on AGM and broader discussion.
It all comes down to whether they can demonstrate further sales win momentum which appears to have tailed off lately. This is in part a function of the cycle I would imagine but the natural cycle for sign ups ie they tend to come in batches. If the sales pipeline remains 'strong' then it should come through.

[marben100] 14/5/2009 09:52

Hi Cyberian et al,

Sorry we didn't make introductions at the AGM - we probably spoke but didn't recognise each other! Also apologies for my delay in reporting on the AGM - other companies have been rather at the forefront of my attention lately. :0) On to the report:

As last year, the whole Board was present.

The Edison note states: Over the last 18 months the new management team has taken the strong software IP within the group and increasingly focused efforts on more effective commercialisation. This has involved a reduction in the number of developers and the recruitment of six new salespeople – retaining a similar cost base. I asked whether this reduction in the development team had impacted Brady's customer service and ability to progress product development.

Gavin Lavelle responded that the team was now "more customer focused" and that adequate investment for future product development had been budgeted. Moreover, he stated that Brady was now hiring additional support staff. Robert Brady did not seem unhappy about the changes. Reading between the lines, I suspect that there has been an element of culling of "dead wood" within the old development team.


I observed that despite a big jump in licence wins last year, forecast earnings were not massively ahead this year. I would have expected a bigger impact on the bottom line, considering the time lag between contract wins and revenue recognition (due to project timescales). Paul Fullager confirmed that the typical implementation time scale was 6-9 months. The Board was rather non-committal about this observation. I also observe that the pace of contract announcements on Brady's website appears to have slowed in 1H09. In conversation with GL after the meeting, he confirmed that Brady's institutional clients were taking longer to sign off deals in the current climate but he still appeared confident and reported that the sales pipeline was strong.

Again, reading between the lines, I suspect that whilst 1H09 revenues will be strong, but that there is less visibility of 2H09 earnings, hence a cautious approach is necessary. I observe that with a significantly larger client base, recurring support revenues should increase significantly, underpinning earnings. From Edison's note: Annual maintenance is 20% [of the licence fee]


Questions were raised about the deployment of Brady's cash pile. The board does seem prepared to make a significant payout to shareholders but rather wishes to reserve the cash for acquisitions and future growth. One acquisition has been made so far this year (noted in the Edison note, p8) and reported here:

Neither are buybacks on the agenda. PF is concerned about liquidity of the shares (see my report on liquidity issues, here: ) and feels that buying back shares would worsen it. Not sure I buy that. Even more significantly, he stated that he was more inclined to make a small placing, to help fund acquisitions and improve liquidity for institutional demand.

He was also asked whether there was any intention to take the company private or delist, in the light of AIM's weaknesses. PF advised that there was no current desire or intent to do so.


Whilst doing some background research, I discovered one important fact that was new to me. It appears that Brady actually has a rather small free float. I already knew (per the annual report) that Robert Brady owns 33%. I believe that Graham Simister has a further 7.7% (R C Greig Nominees). What I did not know was that a former partner (director) of Robert Brady's, Joel Koschitzky, appears to still hold 22% (HSBC global custody holding, formerly in the name of Sidlog Ltd). Other current directors hold a further ~10% between them – so that means that ~70% of shares in issue are currently spoken for.


All these points leave me in a bit of a quandary. Here's my assessment of the Pros & Cons:

Pros

• "Skin in the game" – the Directors have substantial personal holdings to align their interests with those of other s/hs. I observe that the non-exec remuneration is modest.
• High operational gearing, with potential for explosive earnings growth
• Strong, restructured, Board, who have performed very well over the last year, growing sales & focussing the business better, capable of delivering that growth.
• A safe business with substantial cash pile & recurring revenues
• Reasonable (but not exciting) dividend

Cons

• Uncertainty over short-term earnings outlook
• Will the Board deploy cash wisely, make wise acquisitions?
• Will this placing occur and how dilutive will it be?
• Might the Board change its mind about an MBO (probably unlikely, as I can't see how this would benefit the larger s/hs)?

As there is no intention to return the cash to s/hs, I don't think it would be correct to do a "cash adjusted P/E". On that basis, the stock doesn't look particularly cheap to me. In these uncertain times, I have reduced my holding but retain some as I'm prepared to give the Board the benefit of the doubt for now.

Regards,

Mark

[strollingmolby] 13/5/2009 18:54

Thanks, cyberian - that's a very useful summary of the Board's 'cohesiveness'.

And thanks also to marben for posting the story on the appointment of Bob Watson who should bring a wealth of experience, knowledge and contacts with him.

[cyberian] 13/5/2009 18:01

I was at the AGM but have been away since...anyway, issues over liquidity etc were addressed and consequent rapid and wild swings on light selling. The effect is something they can do little about although have considered mopping-up small shares sells. However, they made clear that there was definitely NO intention to take the company private. The whole board were present, 4 Executives, and 4 non-exec., and they were ALL rather impressive. Having said that the CEO and CFO are two key members of integrity, and skill, and should coninue to serve us well. Robert Brady is happy in his new role and found them a very united team. To be honest with my own background in obsering management at various levels I rather felt that these guys were qualified to run a much bigger oprganisation than Brady. Perhaps I should keep quiet about that, but they really are impressive and I have little doubt that they will want to grow Brady into a much more significant company over time. The team will attract (if they haven't already) some Institutional support in perhaps finding some way to leverage their talents. Maybe this will be trough some reverse take-over situation or like ...but I am simply guessing. Brady is a VERY sound company in my opinion, after seeing the full board at the recent AGM.

[marben100] 13/5/2009 16:15

New recruit at Brady announced today: