Brady Plc’s top line numbers for FY11 are impressive, although they were largely fuelled by its Viz Risk Management acquisition in December 2010 (see Brady goes Norwegian with Viz). An acquisition-heavy growth strategy means Brady’s results are top-line heavy and likely to remain so for some time but it did deliver increased profit before tax of £2.1m (vs £0.6m) for the year to December 31 2011.
As far as the numbers go revenue was up 72% to £19.2m, including a 147% increase in recurring revenue to £9.8m, for the provider of trading, risk management and settlement solutions to the energy, metals and soft commodities sectors. Although much of this was acquisition-based growth, revenue grew by 11% on a like-for-like basis, which is more than respectable. Gross margins reduced to 51% from 55% however, due to a higher proportion of lower-margin recurring revenues, courtesy of the Viz business.
The company signed 14 new licence deals during the year (vs 10 last year) so its markets must like what it is doing. Brady has become a market leader in its space and believes it is largest native European software provider in its field and the fifth largest globally by revenue. And it is still growing – it has acquired two companies so far in 2012 (see Brady boosts energy levels with two more acquisitions), one of which (Navita Systems) was a major £17.1m purchase, which will take some integrating.
If it can manage its multiple acquisitions effectively its prospects are bright given the industry focus on risk and governance, the European Electricity Grid Initiative ("EEGI") and demand driven by increased regulatory requirements. The original Brady business was not a large concern so it has to care that it is not taking on more than it can deal with – although Viz (now known as Brady Energy) is trading ahead of expectations, which bodes well. Nevertheless, it has to start raising the bottom line - that is a challenge given the strategic swing to recurring revenue. An upswing in its North American activity (currently 10% of total revenue) would be good to see too.