Along with these half-year figures, management at commodity trading software provider Brady (BRY) revealed that second-half sales and profits are now expected to be materially lower than previously forecast. As a result, the shares plunged 17 per cent on the day the figures appeared.
However, chief executive officer Gavin Lavelle thinks investors needn't be concerned over Brady's longer-term outlook. He says the revenue miss this year merely reflects the fact that negotiations for a few big, complex contracts have taken longer than anticipated in the current volatile commodities market. Revenue from these should, nevertheless, arrive in 2014 and beyond. In the meantime, management has taken steps to cut £2.2m from costs on an annualised basis. Cost-cutting looks sensible - Brady's cost base has been rising steadily to facilitate its global expansion.
The group's first-half cash profit margin fell to 9 per cent from 15 per cent a year ago and adjusted EPS fell 52 per cent to 0.91p. Broker Cenkos, meanwhile, has slashed its full-year earnings estimates by around 40 per cent and now expects adjusted pre-tax profit of £3.3m, with adjusted EPS of 3.5p (from £5.0m and 5.9p in 2012) - although 2014's estimates remain unchanged at £6.7m and 7p, respectively.
BRADY (BRY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 60p | MARKET VALUE: | £48.6m | |
| TOUCH: | 58-62p | 12-MONTH HIGH: | 106p | LOW: 60p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 50p* | NET CASH: | £5.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 12.1 | -0.83 | -0.99 | nil |
| 2013 | 14.9 | -0.14 | -0.16 | nil |
| % change | +23 | - | - | - |
*Includes intangible assets of £40.9m, or 50p a share | ||||
