Brady is doing more deals than ever and they’re at least twice as big as before. More of its revenue is coming from rental contracts, too, which improves visibility for the trading software provider, and management is confident of doing even better in what is traditionally a busier second half.
Eight significant licence contracts were rubber stamped during the first half and another two since the period-end. And, being the largest company of its type in Europe, Brady has the pricing power and extra products to do bigger deals. It's very profitable, too, as first-half operating profit grew 37 per cent to £747,000 once you strip out additional acquisition costs and a provision to cover a payment dispute.
Much of the business is being done in Brady’s core European market. Here, acquisitions helped drive sales in Europe, Middle East and Africa (EMEA) up by 37 per cent to over £10m. And an increase in rental contracts is generating more recurring revenue, too - £6.7m, or 55 per cent of the total. It would have been more, but for the recent avalanche of licence deals, which should swing back in favour of the rental model in the months ahead.
Broker Cenkos Securities expects full-year adjusted pre-tax profit of £5.3m and EPS of 5.7p (£3.6m and 5.4p in 2011).
BRADY (BRY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 97p | MARKET VALUE: | £78m | |
| TOUCH: | 96-98p | 12-MONTH HIGH: | 98.5p | Low: 71.5p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 80 | |
| NET ASSET VALUE: | 49p* | NET CASH: | £7.8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 8.8 | 577 | 1.37 | nil |
| 2012 | 12.1 | -831 | -0.99 | nil |
| % change | +37 | - | - | - |
*Includes intangible assets of £35.3m, or 44p per share | ||||
