Brady plc, the international supplier of fully integrated software solutions for commodity trading and supply chain management, announces its interim results for the six months to 30 June 2005.
- Revenue declined 21% at £1,530,585 (2004: £1,940,299)
- (Loss)profit before tax £(268,537) (2004: profit £823,300)
- Loss per share of 0.80p per share (2004: earnings per share of 2.73p)
- Cash balances £4,268,592 (2004: £5,503,571)
- Completed the acquisition of Tradesoft BV in July
- Completed the integration of Colplan
- Delivered Version 600 for client testing
Though we achieved much in the first half of 2005, progress to date has been slower than we had hoped for at the time of writing my statement in our Annual Report for the year to December 2004.
On the positive side we made some significant progress in a number of areas, in particular:
- we acquired Tradesoft, a Dutch specialist software company bringing add-on knowledge and a number of excellent clients such as Norilsk and Noranda without impactingon our net cash position;
- added further customers through small sales of Opval products to Dresdner Bank and Rab Capital; and
- continued to develop the core Trinity product.
Encouraging as these developments are, our revenues and profits for the year are highly dependent on new Trinity licence sales and as reported in our trading update in August we did not sign the major new Trinity licences we had expected to close in the first half. This is particularly disappointing given the large pipeline of sales leads we have developed. Delays to signing contracts are frustrating but we supply a mission critical piece of software and the decision making process for such system changes within our clients are often lengthy and complicated.
The signing up of new clients is undoubtedly linked to the release of the latest version of Trinity, called Trinity 600. We delivered the alpha version of Trinity 600 on time in January of this year and the beta version in April. However late specification changes by one of our two lead Trinity 600 customers resulted in further feature requirements and a corresponding delay in the final release. Testing of the beta version is ongoing and we had hoped to announce that our first client was live on Trinity 600 around the end of the third quarter. There is likely to be a delay before we reach this point and shareholders should note that as we get closer to the year end our customers are likely to want to finish their year-end processes and go live in 2006 rather than risk introducing a new system in November or December.
Group turnover declined 21% to £1,530,585 (2004: £1,940,299) reflecting the absence of new Trinity licence sales in the period referred to above.
The loss before tax for the period was £(268,537) compared to a profit before tax of £823,300 in the equivalent period last year. The decline is almost entirely due to the absence of new Trinity licence sales, given the inherent high margin on incremental licence sales. Although it is of course disappointing to report a loss it is worth noting that the majority of our costs are now covered by recurring revenue streams and we would hope that this period's lack of new licence sales proves to be the exception.
Our cash balance at the end of the period was £4.3 million.
Second half trading has begun with two upgrades of Trinity 500 going live in July, one in August and another in September without problems. A major client is undertaking a paid review of an Opval upgrade. We have signed modest additional work with a major Tradesoft client and are in detailed discussions with another about upgrading to Trinity.
Our focus for the second half will be twofold: to get Trinity 600 live and we must work to sign up contracts with the clients in our existing sales pipeline. These two issues are doubtless related. To ensure we address the issues properly Brian Collins, ex-CEO of Opval, will become Group Sales Director to give a new impetus to our sales effort whilst freeing up Dr Robert Brady's time to focus on product quality and implementation.
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