the CEO Gavin Lavelle has gone and successor not yet announced - with the (relatively recently appointed) chairman now in exec capacity. Perhaps the main reason for a wishywashy, sparse yet vaguely reassuring update!
In September's interims he said
''Continuing the momentum achieved in the first half with the Group's return to profitability and the significant cost reduction, the Board will be implementing further measures to drive the effectiveness and efficiency of the Group's operation. The review of its organisational structure has already begun and it is our intention to integrate the business more closely across its disciplines including sales, technology and support. This will enable us to drive common systems, methodologies and processes across the Group and importantly enable quicker and more efficient delivery of our products to our customers.
Although current market conditions are difficult the Group has leading market positions, best in class solutions and strong people and teams; we are focused on capitalising on these foundations and building an efficient engine for success to support our future earnings growth.''
By March the full year results will be out and hopefully a new CEO in place.
What a lacklustre update - I really wonder why they bothered. And, for clarity and transparency, why not spell out what the 'market expectations' are? By contrast, the CRW update today is a model of useful information that gives me confidence in continuing to hold. I wish I could say the same for BRY.
"Interim results were well telegraphed by the July trading update and there is little to surprise in these figures bar encouraging success in reducing costs (cash costs in H1 were reduced by £1.6m). Brady has failed to deliver on its potential in recent years and managements intention to refocus the business model gives us encouragement that renewed vigour is being injected into the business. While underlying market conditions present a challenge to trading, we believe they also afford new management the opportunity to take the action necessary to reposition this business for growth. We advise investors to watch developments closely going forward."
"An after-hours profits warning on 30 November hammered LSE:BRY:Brady shares and, despite a partial recovery, these full-year results reflect a company doing what it can until the good times return. The commodity trading and risk management ..."
" It's been a week since commodity trading and risk management software firm LSE:BRY:Brady issued a grim profits warning. There's never a good time to tell the market your business is struggling, but picking 5.47pm on a Monday night was a bad ..."
It appeared to me the CEO stated (on first questioning) in the interview (linked below) that it became apparent at the Board Meeting that trading had deteriorated that they then "sat down with their advisors" (obviously close by) then presumably considered appropriate cost cutting measures, drafted and issued a RNS announcement all in the same day? Did I get the chronology right?
What truly irritates me is that I read the Interim Results in September and as I saw the share price drift down I bought as could see no reason not too! What I now think is the share price was drifting down as others knew of the downturn in trading (and the only think that kept the share price up was the company buying shares back). Am I too cynical?
Still the company has been punished enough and the question now is 45p cheap. I cannot help but think that for their customer base they must become an attractive take over - a premium to the current share price is still way down on the share price of a few months ago and some must be looking at the company as mining and metals will not always be in the doldrums.....
I agree but this could be the first of several profit warnings. Commodities, energy and recycling sectors are all struggling at present so these trading companies are likely to be reluctant to invest in IT upgrades. However, Brady have net cash with no debt and they say potential orders are delayed into next FY rather than completely lost. They are one of the CTRM leaders so orders should recover with time.
Kestrel a Guernsey based OEIC wealth fund has taken up 2.5M of the 3.2M shares dumped by Investec and now has 18% (yesterdays RNS). They appear to look for long term value so I am still holding. Will wait for the full year results which will report in March but there should be trading update in late january. The SP may start to recover once current overhang clears but H2 results will be the main determinant of what happens next - unless theres a takeover bid! (Latchways was a recent example in a different sector)
I'm frustrated with the nature of the release as trading does not deteriorate overnight but they are a good company with lots of cash and so they have time to adjust/ be bought and at this price I think they are good value. There you go.......
Wow, that does seem overdone, but I'm in no rush to jump back in. For a start, bad news usually comes in threes. But what is most concerning - why is commodity trading suddenly doing so badly just because commodity prices have been falling?
Well, last night's profit warning was unwelcome, especially after the reassurance in September. The market reaction this morning, however, is brutal. Too late to sell? Time to buy? I think there is still a good business here with a strong franchise so I will hold for the moment - and try not to regret a decision not to reduce holding during the recent SP slide.
Brookfield Renewable Energy Europe selects Brady Cloud solution to handle Its UK power scheduling
24th September 2015, London:Brady plc (BRY.L), the leading supplier of trading and risk management solutions for energy, commodities and recycling, announced today that Brookfield Renewable Energy Europe has selected Brady Power Scheduling solution to manage its power scheduling activities in the UK.
Brookfield Renewable Energy Group operates one of the largest publicly-traded pure-play renewable power platforms with operations across North America, Latin America and Europe, with a portfolio totalling more than 7,000 MW of installed capacity. In Europe, Brookfield Renewables portfolio consists of 600 MW of operating wind capacity across Ireland, the UK and Portugal, and has a project development pipeline of approximately 1,400 MW.
To support its European growth ambitions, Brookfield sought a reliable, robust and agile solution that could handle the demands of entry into multiple new markets. In Brady, Brookfield found a software partner with a reputation for outstanding quality, experience and user support.
The Brady Energy Scheduling Solution for power supports businesses such as Brookfield with cross-border trading and supply activities. The solution is delivered by Brady Cloud Services, and provides full provision for all TSO Connectivity Services as organisations connectivity requirements evolve.
Brady's dedicated Cloud Services deliver the highest levels of availability and reliability as well as multi-layered (ISO27001 certified) security, providing the perfect environment for scalable enterprise wide and mission critical solutions for organisations of any size.
Ruth Kent, Head of Power Marketing at Brookfield Renewable Europe, commented on the selection process: Bradys unique ability to handle more European markets with a single product provided us with a scalable and flexible solution for our scheduling requirements that can adapt with our business as we continue to expand in Europe
Gavin Lavelle, CEO of Brady plc, commented: Our robust and flexible solution, is perfect for companies requiring the ability to be able to perform scheduling within and between a wide range of European markets and I am confident, that like our other customers, Brookfield will be up and running within the requested timeframe and will quickly recognise the benefits of the Brady scheduling solution."
I read yesterday's announcement, which proposes the introduction of an LTIP for Exec Directors and an undisclosed number of senior managers, with considerable consternation. My concerns include, but are not limited to:
- Why on earth are awards of 150% of salary justified? This seems excessive. After all, directors are already well-paid for doing their jobs of running the company on our behalf.
- The initial award of 150% appears to be without performance criteria!
- EPS (even CAGR over 3 years) is a pretty awful measure as it can be manipulated so easily, not always in the long-term interests of shareholders
- The dilution under the LTIP is capped at 15% over 10 years. Oh that's alright then, only 15% of our company is given away.
The stated intent, as always with these things, is to align the interests of directors and senior management with shareholders. Well in that case, they should be shelling out their own wonga and feeling some real pain if it doesn't work out. Foregoing a zero-cost opportunity just isn't the same.
Don't get me wrong, I've held shares in BRY since 2006 and they've done well as the company has become established and grown. But I don't want to see it go the way of Vislink where the company appears to be run as a trousering vehicle for the CEO and directors. Trust in management is essential to successful share ownership; today that has taken something of a knock.
Does anyone have any greater insight into the scheme and whether it is fair and reasonable?
The new ScrapRunner acquisition looks tremendous - just $2m cash paid for $0.7m of PBT and very high recurring revenues, plus no doubt cost synergies and opportunities for further sales to those clients who aren't already BRY clients:
Panmure have increased their target price to 129p (current price 96p). Forecasts for next year have been lifted to 6.9p EPS.
Cenkos also say Buy today, and have further increased their forecasts after the excellent acquisition.
And there's still room for further acquisitions from the £7m cash pile.
The H1 results are obviously not great in themselves. BRY seem very confident that contracts signed in H2 will make up the difference for the year. In some cases I'd be somewhat doubtful about this, but I trust BRY's management, believe this to be a good company and am happy to hold.
H2 news flow should be excellent assuming these "significant" contracts "in advanced discussions" come through.
BRY's business is primarily about benefiting from volatility, not whether energy/commodity prices are high or low. Thus BRY's principal trading clients need BRY's products more, not less, in times of substantial price movements.
Not to mention the growth and potential in Recycling.
...and of course BRY already has visibility on 80% of this year's forecast revenues with almost 4 months of the year still to go.
During the month Brady revealed that Fortum, one of the largest power suppliers to the Nordic/Baltic region, has chosen Bradys Energy Data Management solution (EDM).
Fortum Electricity Sales is a major energy retailer in Finland, Sweden and Norway, with over 1.2 million consumers. Brady boasts leadership in energy solutions for the Nordic market. In Norway alone, more than 60-70% of all physical traded power is processed via Brady EDM on a daily basis.
"Sims is the worlds leading publicly listed metals and electronics recycler. It has over 250 locations and more than 6,000 employees with operations encompassing the buying, processing and selling of ferrous and non-ferrous recycled metals."
- 50% of BRY's business is with traders, who benefit from price volatility, which has been and is certainly present in recent and current times
- the recent global metals contract is with one of the biggest metal trading companies in the world, being used by over 200 users in 9 global locations
- the other recent contract with one of the largest recycling companies in the world starts with an AsiaPac deployment as part of an eventual global deployment of BRY's solution
- the recycling sector is "absolutely enormous"
- the Energy division is growing as it benefits from the move away from coal etc towards renewables, benefiting from the deregulation of European power markets
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