Brady PLC (LON:BRY)

Brady PLC (LON:BRY)


Share Price
57.00 p
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-0.25 (-0.44 %)
Market Cap
£47.52 m
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Brady PLC RNS Release

Preliminary Results


RNS Number : 8038T
Brady plc
25 March 2019
 

25 March 2019

 

 

Brady plc ("Brady" or the "Group")

 

PRELIMINARY RESULTS

For the year ended 31 December 2018

 

Brady plc (BRY.L), a global provider of trading, risk management and settlement solutions to the energy and commodities sectors, is pleased to announce its unaudited preliminary results for the year ended 31 December 2018. 

 

Financial Highlights

 

·      Adjusted EBITDA* £2.6 million (2017: £0.3 million loss)

·      Revenues up 4% to £23.2 million (2017: £22.2 million)

·      Gross profit up by 15% to £13.9 million

·      Cash costs reduced by £1.1 million

·      Net cash inflow from operations £0.9 million (2017: £0.1 million outflow)

·      Net cash at 31 December 2018 £4.6 million (2017: 4.1 million)

 

Operational Highlights

·      Focus on existing customer engagement and delivery on key milestones

·      Significant product progress: CTRM fast start, tolling module, Elhub project live, I-SEM delivered

·      Carmen Carey appointed CEO with effect from 18 February 2019

·      Improved staff engagement through a series of internal initiatives

·      Completion of Recycling business disposal, receiving net cash proceeds in year of £2.9 million

Financial Summary


 

Unaudited

2018

£'000

Unaudited

restated

2017*

£'000

Revenues - continuing

23,157

22,215




EBITDA before exceptional costs 1

2,628

(307)




Operating loss after exceptional costs 2

(1,102)

(6,950)

Operating loss before exceptional costs 2

(828)

(4,509)




Loss after tax and exceptional costs - continuing

(1,808)

(6,845)




Basic loss per share (in pence)

(2.49)

(10.52)

Adjusted earnings/(loss) per share (in pence) 3

0.01

(5.67)




Cash

4,627

4,089

 

*restated for changes in accounting policies (see note 12)

1 EBITDA before exceptional costs comprises operating loss before share based payments, depreciation, amortisation and exceptional costs

2 The majority of exceptional items incurred in 2018 relates to professional fees incurred pertaining to the appeal against the Norwegian tax assessment. In the prior year, exceptional costs primarily related to the functional transformation of the Group

 

3 Adjusted earnings per share is based on earnings excluding exceptional items, acquired intangible asset amortisation charges and share based payment charges and at a consistent normalised tax rate assumed to be 15%

 

Outlook

 

We have an outstanding team led by our recently appointed CEO, an impressive portfolio of customers world-wide and our products continue to be recognised as market-leading. Our committed revenues for the year to December 2019 are approximately £18 million with cash on the balance sheet of £4.6 million at 31 December 2018. Implementation of the plan set out in the last two annual reports remains on track as we leverage the foundations we have established to deliver high quality customer relationships and growth in line with commitments made to our employees, customers and shareholders. Going into 2019, we look to the future with confidence.

 

Carmen Carey, CEO, said,

"I am delighted to join Brady as CEO and look forward to leading the team as we look ahead to 2019 and beyond.  We have exceptional people and world-class customers, providing us with a strong foundation for high quality customer relationships, growth and innovation". 

 

 

 

 

For further information please contact:

Brady plc

Carmen Carey, CEO

Martin Thorneycroft, CFO

 

 

Telephone: +44 (0)1223 479479

Cenkos Securities plc

Mark Connelly

 

Telephone: +44 (0)20 7397 8900

Newgate Communications

Bob Huxford

Ian Silvera

 

 

Telephone: +44 (0)20 3757 6767

 

 

About Brady

Brady plc (BRY.L) is the largest European-headquartered provider of trading and risk management software to the global commodity and energy markets. Brady combines fully integrated and complete solutions supporting the entire commodity trading operation, from capture of financial and physical trading, through risk management, handling of physical operations, back office financials and treasury settlement, for energy, refined and unrefined, soft commodities and agriculturals.  

 

Brady has over 30 years' expertise in the commodity markets with some 200 customers worldwide, who depend on Brady's software solutions to deliver vital business transactions across their global operations. Brady clients include many of the world's largest financial institutions, trading companies, miners, refiners and producers, tier one banks and a large number of London Metal Exchange (LME) Category 1 and 2 clearing members and many leading European energy generators, traders and consumers.

 

For further information visit: www.bradyplc.com                                          

Brady plc: Twitter/Facebook/LinkedIn 



 

Chairman's statement

 

The strategy and plan agreed by the Board at the end of 2016 has not changed. In 2017, we completed much of the work urgently needed to restructure the company and establish the foundations for execution and growth. In 2018, we continued to focus on delivery against our agreed plan, including our commitments to our employees and delivering to our base of blue-chip customers, resulting in a high-quality revenue stream with a high level of recurring earnings to our shareholders. Execution against new customer acquisition has been secondary to our focus on resourcing and delivering against existing customer commitments.

 

Strategic progress

 

In my report last year, we set out our priorities for the year ended 31 December 2018 and we delivered progress against those items as follows:

 

Deliver a customer centric experience to the market

The account management team had a strong year. The improved dialogue and relationships with our customers resulted in the team exceeding their targets for value added and revenue. None of this would have been possible without the engineering teams making substantial progress in the delivery of several long-term customer projects. We are engaging with customers and industry experts to validate customer and market perspectives as we prioritise our future developments and innovation roadmap.

 

Re-establish our technology and product leadership

We continued to extend our product capabilities. We released our new fast start version of CTRM that allows customers to start trading in a number of commodities markets using an off the shelf product. We also released an upgrade of our tolling module, supporting our CTRM product expansion. We defined a refactored version of our credit risk product and delivered key market change updates to our ETRM products. The progress we are making is being recognised by the wider market with Brady being featured on the front cover of CIO magazine and back to number one in metals trading software in ComTech Advisory's annual survey.

Create simplicity and efficiency in our organisation

We followed the restructuring of 2017 with the definition and implementation of common processes across the business. Our business enablement team has delivered new and improved back office systems, improved management reporting across a suite of KPI's, and additional leadership and job specific training.

Create a high-performance culture and company.

 

We completed an internal consultation process to determine our values and principles. The revised Brady values are innovation, trust and collaboration. Now, our task is to bring these values to life in everything we do. A core component of our trust value is our continued commitment to act on the results of the employee surveys. We completed two during the year, both with strong participation and positive progression. One of the actions coming out of the 2017 survey was our commitment to support the professional growth of our managers throughout the organisation. In line with this, we currently have 35 managers going through a comprehensive leadership program, called the Ripple Effect.

 

Financial performance

 

Our revenues for the year ended 31 December 2018 were £23.2 million and adjusted EBITDA before one-off exceptional items was £2.6 million. This is a significant turnaround from 2017 when we showed revenue of £22.2 million and an adjusted EBITDA loss of £0.3 million. Recurring revenues increased by 2% to £16 million.

 

Our operating loss before exceptional items was £0.8 million for the continuing business compared with a loss of £4.5 million in 2017. This year we incurred non-recurring costs of £0.3 million, compared to £2.4 million in 2017.

 

We start 2019 with committed recurring revenues and contracted development and services revenues of approximately £18 million and cash on hand of £4.6 million.

 



 

Summary and outlook

I would like to thank all Brady employees for their continued quality work during the year which enabled us to deliver on our commitments to our customers and our shareholders. Looking ahead to 2019, our strategic direction remains focused on:

·      delivering a best in class customer-centric experience;

·      new customer acquisition;

·      product alignment; and

·      increasing employee satisfaction through consistent, open engagement whilst ensuring transparency and alignment throughout the organisation.

We have an outstanding team led by our recently appointed CEO, an impressive portfolio of customers world-wide and our products continue to be recognised as market-leading. Our committed revenues are approximately £18 million with cash on the balance sheet of £4.6 million at 31 December 2018. The plan set out in the last two annual reports remains the same as we leverage the foundations we have established to deliver high quality customer relationships and growth in line with commitments made to our employees, customers and shareholders.

In the period since September 2016 when I became Executive Chairman at Brady, we have achieved a huge amount of change. The business has evolved positively in terms of product value proposition, customer satisfaction and employee engagement. The people within Brady made these changes and our progress possible. As I step back from being Executive Chairman to Non-Executive Chairman and Carmen becomes CEO, the Board and I can look to the future of the Brady with confidence. 

 

 

Ian Jenks

Executive Chairman

 

 



 

Operating review

 

Our customers and market

 

The focus in 2018 was reconnecting with our customers. Teams across Brady played a significant role in ensuring we delivered key customer projects during the year. The Account Management team secured multiple licence renewals and project upgrades, and we increased our presence in the market through thought leadership and market engagement.

 

We launched our new branding, which has been well received by customers, our team and the market. We were featured in the CIO magazine series as leaders in the Top 10 ETRM solutions providers (in July 2018) and again in November 2018 featured as leaders in the Top 10 ERM publication. In addition, Brady were once again recognized as the leaders in metals by ComTech Advisory in their biennial vendor perception report.

Our products

Throughout 2018, we executed the stated product strategy for the commodities and energy markets.

 

In the commodities product portfolio, we implemented concentrates functionality including a new end-to-end tolling process. In terms of features enhancements, we added automatic creation of inter-company transactions, processes for single content concentrates, more granularity in the content of concentrates (multiple moistures) and pricing functionality.

 

Other enhancements delivered focused on the contract management components and functionality to support the introduction of the new LME ferrous contracts.

 

For the energy markets, we launched the Elhub project which provides support for over 3 million energy meters in the Norwegian power market, added the regulation module for electronic activation of RK and delivered I-SEM for the Irish energy market.

 

In terms of market regulation, we implemented functionality to support GDPR, support of the German/Austrian market split and enhanced our connectors and adaptors to various exchanges including NASDAQ for German futures, ICE FIX adapter, EEX pricing structure changes, a Danish adaptor for the power market and changes to the French power market formats. New instruments have been added including green certificates, structured deal and OMIP gas futures. Finally, we added functionality for spot bidding that automates the submission into EPEX power auctions.

 

Looking to the future, we have initiated the design phase of the new limits management module. This component will be designed for deployment across Brady's product portfolio across commodities and energy products.

Our people

The focus for 2018 was to build strong, united foundations for our culture and people approach, ensuring consistency and effective leadership in alignment with our values of trust, innovation and collaboration.

 

A key deliverable in our people agenda was our Employee Handbook celebrating Brady's rich heritage, introducing new team members to the business, establishing common ground for long-serving employees and ensuring we all understand who we are as a business and how we get things done.

 

We implemented a self-service HR system providing all team members with a common platform to collaborate regarding performance and professional growth.

 

We invested in our commitment to transparent and capable leadership through the launch of a bespoke values-led professional growth program for our people leaders across the business with the objective to deliver a superlative leadership experience to our teams and employees.

We are excited and optimistic to see the Brady culture evolve in 2019. We will continue to build on the high-quality contributions of all team members in 2018 and focus on their professional growth as well as initiatives that promote our values such as employee nominated recognition for employees delivering our values in exceptional ways through our Sally Marshall Awards in honour of late long-term team member.

 

Ian Jenks

Executive Chairman 

Financial review

Group trading performance

Revenue mix

The revenue composition is summarised in the tables below:


2018

£ million

      

% of total

   2017

  £ million

 

% of total

Recurring revenues

16.0

69%

15.7

71%

Services and development revenues

3.8

16%

4.2

19%

Licence revenues

3.4

15%

2.3

10%

Total revenues

23.2

100%

22.2

100%

2018's revenue performance was driven by a focus on servicing our existing client base and achieving revenue recognition milestones on several long-term implementations. Revenue within the businesses (Energy and Commodities products) increased in total to £23.2 million, an increase of 4%. Recurring revenues comprised 69% (2017: 71%) of our total revenues. This slight decrease in overall percentage was as a result of the increase in licence revenue in the year on customer implementations as revenue recognition milestones were achieved.  Net customer churn, being the annual revenue lost less annual revenue gained, was £0.2 million (2017: £(0.4) million). Services and development revenues at £3.8 million, were down £0.4 million on 2017, reflecting the lower level of new business in the year.

Gross margin

The overall gross margin before exceptional items for the continuing business increased to 60% (2017: 56%) as a result of increased efficiencies in delivering customer contractual obligations and an increase in licence revenues as a result of renewals and the achievement of revenue recognition milestones on several customer implementations.

Profitability

Adjusted EBITDA (earnings before interest, tax, share option costs, depreciation, amortisation) before exceptional items increased to £2.6 million (2017: loss of £0.3 million). The improvement in adjusted EBITDA is driven by an increase in revenue of £0.9 million, an improvement in efficiency of £1.1 million and a higher level of capitalised development of £0.9 million as we continue to invest in our products. The improvement in efficiencies were as a result of the re-organisation in 2017.

Operating loss before exceptional items and tax decreased to a loss of £0.8 million (2017: £4.5 million loss). Loss after exceptional items and tax decreased to £1.8 million (2017: £6.8 million loss) for the continuing business.

Research and development expenditure

Total research and development spend for the continuing business amounted to £7.0 million (2017: £7.5 million).  Of this, £4.1 million was expensed (2017: £5.4 million) and £2.9 million (2017: £2.1 million) was capitalised.  This was a year of substantially increased investment in Strategic Software Development (SSD). During the year notable developments were made to the concentrates product and a new tolling module in our commodities trading and risk platform.  Significant new functionality was also added to our energy trading and risk management platform.  

Capitalised development, which is referred to internally within Brady as SSD, represents large strategic developments of significant new modules or functionality.  These projects are selected and approved by the Board as part of the business planning and budget process.  The largest single capitalised project in 2018 was £0.5 million (2017: £0.5 million) in respect of the tolling module for the Fintrade product. This allows a customer to process tolling contracts for raw materials and expands our product offering to the commodity trading market. SSD for 2019 is expected to be approximately £3 million.

Foreign exchange rates

Foreign exchange rates used to translate the balance sheets of our subsidiaries at 31 December have strengthened against Sterling between 2017 and 2018.  However, the average exchange rates used to translate the income statements of our subsidiaries have weakened against sterling. Compared to the 2017 average rates the 2018 average rates for the US dollar, Norwegian Krone and Swiss franc all weakened against sterling by 4%, 2% and 3% respectively.  The impact of this for the continuing business was to decrease both revenue and costs by £0.3 million respectively.

Exceptional items and disposal of the Recycling business

The exceptional items comprise:

·      £0.2 million of professional fees pertaining to the appeal against the Norwegian tax assessment and £0.1 million of costs in respect of one-off recruitment for a new chief executive and legal costs pertaining to an employee dispute.

Disposal of the Recycling business

The Recycling business was disposed of on 25 January 2018 and has therefore been accounted for as a disposal group. Its financial performance for the year ended 31 December 2018 has been brought into the consolidated income statement as a single line. The income statement in 2017 includes an adjustment to write down the net assets to its disposal carrying value. The analysis of performance for 2018 and 2017 is shown below:





 2018     

£'000

2017        

£'000

Revenue




273

4,220

Cost of revenues




(105)

(1,960)

Gross profit




168

2,260

Operating expenses




(132)

(2,198)

Operating profit before adjustments to write down carrying value of net assets




36

62

Analysed as:






Gross profit




168

2,260

Operating expenses




(115)

(1,877)

Adjusted EBITDA before adjustments to write down carrying value of net assets




53

383

Depreciation




(3)

(48)

Amortisation of acquired intangible assets




(5)

(84)

Amortisation of other intangible assets




(9)

(189)

Operating profit before adjustments to write down carrying value of net assets




36

62

Adjustments to write down net assets to carrying value at disposal




-

(1,906)

Operating profit/(loss) after adjustments to write down carrying value of net assets




36

(1,844)

Tax expense




-

(190)

Adjustment to deferred tax




-

112

Profit/(loss) from discontinued operations




36

(1,922)

The loss on disposal of the Recycling business was £0.3 million. Cash received on 25 January 2018 amounted to £3.7 million with the balance of £1.0 million to be paid in July 2019.

Income tax

The overall tax charge for the year was £0.7 million (2017: £0.1 million credit). The charge in 2018 was higher due to the improvement in the Group's overall profitability. The ongoing transfer pricing tax issue in Norway which relates to an alleged transfer of intellectual property from Norway to the UK in 2011 and 2012 following the acquisitions of Viz Risk Management AS and Navita AS, for which the Group has provided £2.1 million as at 31 December 2018, has seen some further developments. The tax authorities have issued a decision which the Group does not agree with, and following professional advice has appealed this decision since the year end.

Subsequent to the year end, the Group has received (net) tax invoices amounting to £2.6 million for the period 2011 to 2017, for which the Group has provided £1.6 million. The maximum exposure is an additional £1.0 million on top of the provision made of £2.1 million. The Group has also agreed with the Norwegian tax authorities a deferred payment plan. If the appeal is upheld then any tax paid in excess of the determined amount will be refunded. Having regard to the professional advice received, the £2.1 million provision made remains management's best estimate of the likely outcome.

Earnings and dividends

After including the exceptional charges, the loss after tax on continuing operations decreased to a loss of £1.8 million (2017: £6.8 million loss).

The weighted average number of shares in issue increased to 83.4 million (2017: 83.3 million). Basic and diluted loss per share was 2.49 pence per share (2017: loss per share of 10.52 pence). Adjusted earnings per share, as calculated by market analysts, adjusted to exclude share-based payments, amortisation of acquired intangible assets, exceptional items and, assuming a consistent normalised tax rate of 15%, was 0.01 pence profit per share (2017: 5.67 pence loss per share).

The Board does not propose a dividend for the year.

Share issues

No share options (2017: 285,000) held under the Company's share option schemes were exercised in 2018. Proceeds from the exercise of share options were therefore £nil (2017: £190,000).

Treasury shares

The total number of ordinary shares held in treasury during the year remained at 4,306 (2017: 4,306).

Consolidated Statement of Financial Position

The Group continues to retain a strong balance sheet with significant cash reserves.

Non-current assets

Goodwill increased to £15.8 million from £15.7 million due to movement foreign exchange. 

Acquired software decreased to £2.3 million from £3.2 million and acquired customer relationships decreased to £1.0 million from £1.3 million as a result of amortisation during the year.

The Group capitalised £2.9 million (2017: £2.1 million) of expenditure in relation to Strategic Software Development programmes. The Group has a continued commitment of enhancing and expanding its offerings and taking its technology forward. The bulk of expenditure incurred during the year on research and development was, however, expensed as incurred. The book value of capitalised development costs increased to £6.8 million (2017: £5.5 million) reflecting the increased investment in new product functionality.

Current assets

Other current assets, which mainly comprises prepayments and other receivables, decreased from £1.5 million in 2017 to £1.1 million in 2018. Included within £0.4 million (2017: £0.5 million) of contract assets are amounts recoverable on contracts and contract fulfilment cost. Amounts recoverable on contracts arises principally on consulting and professional services revenue, which is typically invoiced in the month following provision of the service. Trade and other receivables increased to £4.2 million (2017: £2.8 million), Included within trade receivables is deferred consideration of £0.9 million due for the sale of the Group's Recycling business on 25 January 2018.

Current liabilities

Trade and other payables decreased to £5.3 million (2017: £5.4 million). Contract liabilities, which comprises deferred income, decreased to £6.4 million (2017: £7.8 million). Deferred income arises principally as a consequence of payments received in advance of revenue recognition.

Cash and cash flow

Operating cash generation was £0.9 million (2017: £(0.1) million).

The Group had investment outflows of £0.4 million (2017: £2.8 million), as spending on intangible assets increased to £3.0 million (2017: £2.5 million) in 2018, offset by net proceeds of £2.9 million from the sale of the Recycling business.

Cash in hand at 31 December 2018 was £4.6 million (2017: £4.4 million).

At 31 December 2018, the Group had an unutilised bank overdraft facility of £0.5 million. In March 2019, this was increased to £1.0 million to cover short-term working capital requirements. The facility reduces to £0.5 million on 1 August 2019 and then increases back to £1.0 million from 16 October 2019 until 15 January 2020 and decreases to £0.5 million from 16 January 2020, in line with the Group's seasonal working capital cycle.

 

Martin Thorneycroft

Chief Financial Officer

 



 

Consolidated income statement

For the year ended 31 December 2018


 

 

 

 

Notes

Unaudited

Before exceptional items

2018

£'000

Unaudited

Exceptional items

2018

£'000

 Unaudited

2018     

£'000

Restated*

Before exceptional items

2017

£'000

Restated*

Exceptional items

2017      

£'000

 

Restated*

2017      

£'000

Revenue from contracts with customers

4

23,157

-

23,157

22,215

-

22,215

Cost of revenues


(9,250)

-

(9,250)

(9,852)

(267)

(10,119)

Gross profit


13,907

-

13,907

12,363

(267)

12,096

Operating expenses

 

5.1

(14,480)

(274)

(14,754)

(16,738)

(1,634)

(18,372)

Net impairment losses on financial and contract assets

 


(255)

-

(255)

(134)

(540)

(674)

Operating loss


(828)

(274)

(1,102)

(4,509)

(2,441)

(6,950)

Analysed as:








Gross profit


13,907

-

13,907

12,363

(267)

12,096

Other operating expenses


(11,279)

(274)

(11,553)

(12,670)

(2,174)

(14,844)

Adjusted EBITDA


2,628

(274)

2,354

(307)

(2,441)

(2,748)

Share based payment credit/(charge)


137

-

137

(9)

-

(9)

Depreciation

5.1

(367)

-

(367)

(298)

-

(298)

Amortisation of acquired intangible assets

5.1

(1,283)

-

(1,283)

(1,559)

-

(1,559)

Amortisation of other intangible assets

5.1

(1,943)

-

(1,943)

(2,336)

-

(2,336)

Operating loss


(828)

(274)

(1,102)

(4,509)

(2,441)

(6,950)

Net finance expense


(42)

-

(42)

(22)

 

-

(22)

Loss before tax


(870)

(274)

(1,144)

(4,531)

(2,441)

(6,972)

Income tax (expense)/ credit

6

(664)

-

(664)

127

-

127

Loss for the year from continuing operations


(1,534)

(274)

(1,808)

(4,404)

(2,441)

(6,845)

Loss from discontinued operations


(271)

-

(271)

(1,922)

-

  (1,922)

Loss for the year


(1,805)

(274)

(2,079)

(6,326)

 

(2,441)

(8,767)

















Loss per share attributable to the equity shareholders of the Parent Company (pence)



Basic

7.1



(2.49p)



(10.52p)

Diluted

7.1



(2.49p)



(10.52p)

* See note 12 for details regarding the restatements for changes in accounting policies.

The accompanying notes are an integral part of this preliminary information.



 

Consolidated statement of comprehensive income

For the year ended 31 December 2018

 

 

 

 

 



Notes

Unaudited

2018

£'000

Restated*

2017

£'000

Loss for the year




(2,079)

(8,767)

Other comprehensive income/(loss):






Items that may be reclassified subsequently to profit and loss

 






Exchange differences on retranslation of foreign operations



11

272

(1,419)

Exchange differences relating to discontinued operations



11

(27)

(57)

Items that will not be reclassified subsequently to profit and loss

 






Remeasurements of post-employment benefit obligations




704

261

Other comprehensive income/(loss) for the year




949

(1,215)

Total comprehensive loss for the year




(1,130)

(9,982)

* See note 12 for details regarding the restatements for changes in accounting policies.

The accompanying notes are an integral part of this preliminary information.



 

Consolidated statement of changes in equity

For the year ended 31 December 2018


Share capital & premium £'000

Other

equity     £'000

Other reserves       £'000

Retained earnings £'000

Total       £'000

Balance at 1 January 2017, as previously reported                                                                                      

37,930

(3)

(1,888)

(2,703)

33,336

Change in accounting policy (See note 12)

-

-

-

(1,350)

(1,350)

Restated total equity at 1 January 2017

37,930

(3)

(1,888)

(4,053)

31,986

Loss for the year (restated*)

-

-

-

(8,767)

(8,767)

Other comprehensive loss

-

-

(1,476)

261

(1,215)

Total comprehensive loss for the year

-

-

(1,476)

(8,506)

(9,982)

Credit for equity-settled share-based payments

-

-

11

-

11

Transfer for exercised & forfeited share options

-

-

(361)

361

-

Issue of new share capital

190

-

-

-

190

Transactions with owners

190

-

(350)

361

201

Balance at 31 December 2017

38,120

(3)

(3,714)

(12,198)

22,205

 

 

 






Balance at 1 January 2018, as previously reported

38,120

(3)

(3,714)

(10,328)

24,075

Change in accounting policy (See note 12)

-

-

-

(1,870)

(1,870)

Restated total equity as at 1 January 2018

38,120

(3)

(3,714)

(12,198)

22,205

Loss for the year

-

-

-

(2,079)

(2,079)

Other comprehensive income

-

-

245

704

949

Total comprehensive loss for the year

-

-

245

(1,375)

(1,130)

Release of credit for equity-settled share-based payments

-

-

(137)

-

(137)

Transfer for exercised & forfeited share options

-

-

(55)

55

-

Transactions with owners

-

-

(192)

55

(137)

Balance at 31 December 2018

38,120

(3)

(3,661)

(13,518)

20,938

 

* See note 12 for details regarding the restatements for changes in accounting policies.

A reconciliation of the components of Other reserves is given in note 11.

The accompanying notes are an integral part of this preliminary information.

 

 

 

 

 

 

 

 

Consolidated statement of financial position

As at 31 December 2018

 

 

 

 

Notes


Unaudited

2018      

 £'000

 

Restated*

2017     

 £'000

Restated*

1 January 2017     

  £'000

Assets





Non-current assets






Intangible assets



26,449

26,091

35,999

Property, plant and equipment



746

487

978

Deferred income tax asset



90

423

456

Total non-current assets



27,285

27,001

37,433

Current assets





Other current assets



1,073

1,461

1,822

Contract assets

4.4


360

516

1,135

Trade and other receivables



4,167

2,810

4,340

Cash and cash equivalents



 4,627

4,089

7,343

Assets classified as held for sale



-

5,848

-

Total current assets



10,227

14,724

14,640

Total assets    



37,512

41,725

52,073

Liabilities        





Current liabilities






Trade and other payables



(5,295)

(5,355)

(5,800)

Contract liabilities

4.4


(6,360)

(7,838)

(8,617)

Borrowings    

8


(233)

-

-

Provisions



(364)

(350)

-

Liabilities classified as held for sale



-

(1,384)

-

Total current liabilities



(12,252)

(14,927)

(14,417)

Non-current liabilities





Borrowings    

8


  (296)

-

-

Deferred income tax liabilities  



(1,975)

(2,099)

(2,938)

Pension obligations



(2,051)

(2,494)

(2,732)

Total non-current liabilities



(4,322)

(4,593)

(5,670)

Total liabilities



(16,574)

)

(19,520)

)

(20,087)

Net assets



20,938

22,205

31,986



 







Equity attributable to owners of the Parent Company




Share capital and share premium

9


38,120

38,120

37,930

Treasury shares

10


(3)

(3)

(3)

Other reserves

11


(3,661)

(3,714)

(1,888)

Retained earnings



(13,518)

(12,198)

(4,053)

Equity attributable to shareholders of the Parent Company



20,938

22,205

31,986

* See note 12 for details regarding the restatements for changes in accounting policies.

The accompanying notes are an integral part of this preliminary information.

 



 

Consolidated statement of changes in cash flows

For the year ended 31 December 2018

 

 

 

 

Notes



Unaudited

2018

£'000

Restated*  2017

£'000

Loss before tax continuing operations




(1,144)

(6,972)

Loss before tax discontinued operations




(271)

(1,844)

Adjustments for:






Write down of carrying value of net assets for discontinued operations




-

1,906

Depreciation




367

346

Amortisation of acquired intangible assets


1,283

1,643

Amortisation of other intangible assets


1,943

2,525

Loss from disposal of property, plant and equipment

5.1



42

5

Share-based payment (credit)/charge




(137)

11

Non-cash movement of defined benefit pension charge




82

134

Net finance expense




42

22

Loss on disposal of discontinued operation




307

-

Operating cash flows before working capital movement




2,514

(2,224)

Change in receivables




200

817

Change in payables




(404)

901

Change in provisions




14

350

Change in contract assets




156

619

Change in contract liabilities




(1,478)

(779)

Cash generated from/(used in) operations before tax




1,002

(316)

Net income taxes (paid)/received




(73)

247

Net interest paid




(7)

-

Net cash flows from/(used in) operating activities




922

(69)

Cash flows from investing activities






Net proceeds from sale of subsidiaries




2,936

-

Purchases of property, plant and equipment




(317)

(314)

Expenditure on intangible assets




(2,986)

(2,492)

Proceeds from disposal of property, plant and equipment




14

-

Net cash flows used in investing activities




(353)

(2,806)

Cash flows from financing activities






Proceeds from the issue of ordinary share capital

9



-

190

Interest paid on borrowings




(64)

(22)

Principal elements of finance lease payments




(180)

-

Net cash flows (used in)/generated by financing activities




(244)

168

Net increase/(decrease) in cash and cash equivalents



325

(2,707)

Cash and cash equivalents at start of year




4,354

7,343

Exchange differences on cash and cash equivalents




(52)

(282)

Cash and cash equivalents at end of year




4,627

4,354

* See note 12 for details regarding the restatements for changes in accounting policies.

The accompanying notes are an integral part of this preliminary information. 

1    General information

Brady plc ("the Company") and its subsidiaries (together, "the Group") provides trading and risk management software to the global commodity and energy markets.

The Company is a public limited company which is listed on AIM part of the London Stock Exchange (BRY) and is incorporated and domiciled in England and Wales. The address of its registered office, which is also its principal place of business, is 100 Lower Thames Street, London, EC3R 6DL.

The Group has its main operations in the UK, Switzerland, Norway, USA, Singapore and India and sells mainly in Europe, North America and Asia Pacific. The Group legally consists of 19 companies headed by Brady plc (UK) as at 31 December 2018.

The preliminary financial information has been approved for issue by the Board of Directors on 22 March 2019.

 

2    Significant accounting policies

Alternative performance measures

The Group uses alternative (non-Generally Accepted Accounting Practice ('non-GAAP')) performance measures of 'Adjusted EBITDA' and 'Adjusted earnings per share (EPS)'. These measures are not defined within the International Financial Reporting Standards ('IFRS') and, therefore, these measures as defined by the Group may not be comparable with similarly titled measures used by other companies. The Directors do not regard these measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS. The Directors present these measures in the financial statements in order to assist investors in their assessment of the trading performance of the Group. Adjusted EBITDA and Adjusted EPS exclude specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year and are used for internal performance analysis and in relation to certain employee incentive arrangements. The measures are explained as follows:

(a) Adjusted EBITDA: The Group calculates this measure by making adjustments to exclude certain items from operating profit or loss namely: amortisation or impairment of acquired and other intangible assets, share-based payments, depreciation and exceptional items such as integration or reorganisation costs that meet the criteria to be adjusted.

The criteria for the adjusted items in the calculation of adjusted EBITDA is operating income or expenses that are material and either arise from an irregular and significant event or the income/cost is recognised in a pattern that is unrelated to the resulting operational performance. The calculation of this measure is shown in the Consolidated income statement. 

(b) Adjusted earnings per share ('EPS'): The Group calculates this measure by dividing adjusted loss after tax by the weighted average number of shares in issue and the calculation of this measure is disclosed in note 7.2. The tax rate applied to calculate the tax charge in this measure is a normalised tax rate for the year which is 15% (2017: 15%) which results in a comparable tax charge year on year. The Group also calculates this measure by excluding amortisation on acquired intangible assets, share-based payment (credit)/charge, exceptional items such as integration or reorganisation costs, and the actual tax charge from the measurement of loss for the year.

The adjusted EPS information is considered to provide a fairer representation of the Group's trading performance.

 



 

Segment reporting

IFRS 8 requires a "management approach" under which information in the financial statements is presented on the same basis as that used for internal management reporting purposes. Segment results are reported according to the internal management reporting structure at the reporting date.

Following the functional transformation of the business, effective 1 January 2017, the Group is now organised for reporting purposes into a single, global business unit.

The internal management accounting information has been prepared on an IFRS basis but has a non-GAAP "Adjusted EBITDA" as a profit measure for the overall Group and this is reported on the face of the Consolidated  income statement.

Revenue recognition

Revenue comprises the value of sales (excluding trade discounts and VAT) of goods and services in the normal course of business. The Group has multiple revenue streams and the policy for each is detailed below. The Group acts as the principle in all sales.

 

To determine whether to recognise revenue, the Group follows a 5-step process:

1.     Identifying the contract with a customer

2.     Identifying the performance obligations

3.     Determining the transaction price

4.     Allocating the transaction price to the performance obligations

5.     Recognising revenue when/as the performance obligation(s) are satisfied.

 

Contracts typically contain a number of revenue streams and, depending on the contractual terms, may not be distinct and therefore considered to be one performance obligation. The total contract transaction price is allocated to the various performance obligations based on their relative standalone selling prices.

 

Software and associated installation services

Revenue from rental (subscription) of software is recognised evenly over the period from the date the customer can benefit from using the software, typically the point when the customer has the ability to 'go-live', until the contract end date. Software rental contracts are under a 'right to access' model and the Group retains control of the intellectual property throughout the contract term.

 

Revenue from sale of software term licences is recognised at a point in time when the customer has control of the asset, which is typically at the point when the customer has the ability to 'go-live'. Software term licence contracts are under a 'right to use' model and the customer is entitled to the intellectual property as it stands at a point in time.

 

Due to the nature of the Group's software offerings, there is typically a period of installation before the customer can benefit from the asset. Revenue from installation services is recognised on completion of related performance obligations, typically when the customer has the ability to 'go-live'.

 

Consulting and professional service fee revenues

Revenue from consulting and professional service fees is recognised over time as the work is performed as this reflects when control is considered to be transferred. The customer receives and consumes the benefit of the service as it is performed, and the Group has an enforceable right to payment for work completed to date on a time and materials basis.

 

The Group performs some bespoke development work on its software products at client request. Revenue from bespoke development work is recognised at a point in time when contractual commitments have been delivered, which is typically when the customer has the ability to 'go-live'.

 

Support, maintenance and hosting

Revenue from support, maintenance and hosting is recognised evenly over period to which it relates in line with contractual terms. As the amount of work required under these contract elements does not vary significantly from month-to-month, the straight-line method provides a faithful depiction of the transfer of goods or services.



 

Contract assets and liabilities

The Group recognises the following contract assets in the Consolidated statement of financial position:

·      Amounts recoverable on contracts, if the Group satisfies a performance obligation before it invoices the customer. The asset is derecognised at the point in time when the Group invoices the customer.

·      Contract fulfilment costs, if the following criteria are met:

The costs directly relate to a contractual performance obligation;

The costs relate to satisfaction of a performance obligation in the future; and

The costs are expected to be recovered.

The asset is amortised over the period in which the revenue from the related performance obligation is recognised.

 

At each reporting date, contract assets are assessed for impairment by comparing the carrying amount of the asset to the remaining consideration that the Group expects to receive under the contract, less future costs to complete.

 

No contract assets are recognised for incremental costs of obtaining customer contracts as assessment of whether such costs are recoverable is not probable.

 

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as 'contract liabilities' in the consolidated statement of financial position.

 

Financing elements

The Group does not expect to have any contracts where the period between revenue recognition and payment by the customer exceeds one year. Consequently, the Group applies the practical expedient in IFRS 15.63 and does not adjust the transaction price for the time value of money.

 

Contract modifications

From time to time, there is a change in scope of the original contract between the Group and a customer. All contract modifications are supported by contractual change orders. Change orders are accounted for as a separate contract when:

·      The change order includes distinct goods or services; and

·      The price changes relative to the standalone prices of the goods or services.

If both criteria are not met, the change order is not accounted for as a separate contract and the Group accounts for the change order as if it were part of the performance obligations in the existing contract. The effect of the change order on contract value and progress to date is assessed at the contract modification date and a cumulative catch-up adjustment to revenue is recognised at this point.

 

Exceptional items

Material, non-recurring and incremental costs and income are identified and reported as exceptional items separately from the underlying operating expenses and income. They comprise material amounts outside of the course of normal trading activities which are one off/non-recurring.

 

Discontinued operations

A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Consolidated income statement and are shown net of tax.

 

Held for sale assets and liabilities

Where an asset or group of assets (a disposal group) is available for immediate sale and the sale is highly probable and expected to occur within one year, the disposal group is deemed held for sale. At this point the gross assets and gross liabilities of the disposal group are shown separately as held for sale. The value of the disposal group is measured at the lower of the carrying amount and fair value less costs of disposal.

 

3    Segmental information

3.1  Results by operating segment

 

IFRS 8 requires a "management approach" under which information in the financial statements is presented on the same basis as that used for internal management reporting purposes.

 

Following the functional transformation of the business, effective 1 January 2017, the Group is now organised for reporting purposes into a single, global business unit. This is the basis of the Group's external market offering and internal organisational and management structure. The Chief Operating Decision Maker (CODM), which is the Operating Board comprising Executive Directors and certain senior management, receives financial information reported as a single business unit and the Group has determined that it has only one reportable segment as defined by IFRS 8.

 

The internal management accounting information has been prepared on an IFRS basis but has a non-GAAP "Adjusted EBITDA" as a profit measure for the overall Group and this is reported on the face of the income statement.

 

4   Revenue from contracts with customers

 

4.1 Disaggregation of revenue from contracts with customers

 

The Operating Board consider that the business has three revenue streams with different characteristics, which are generated from the same assets and cost base. The Group derives revenue form the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions:

 

Year ended 31 December 2018

 

Recurring support, maintenance and rentals £'000

Services including development £'000

Software licences £'000

Total

£'000

UK

2,673

658

433

3,764

Switzerland

1,585

65

1,404

3,054

Norway

3,766

622

113

4,501

Other EMEA

4,926

1,966

981

7,873

EMEA

12,950

3,311

2,931

19,192

USA

1,766

15

176

1,957

Other Americas

638

130

-

768

Americas

2,404

145

176

2,725

Asia Pacific

677

312

251

1,240






Total revenues

16,031

3,768

3,358

23,157






Timing of revenue recognition





At a point in time

-

1,063

3,358

4,421

Over time

16,031

2,705

-

18,736

 



 

Year ended 31 December 2017

 

Recurring support, maintenance and rentals £'000

Services including development £'000

Software licences £'000

Restated

Total

£'000

UK

2,226

546

51

2,823

Switzerland

2,015

826

154

2,995

Norway

3,531

744

257

4,532

Other EMEA

4,725

1,584

483

6,792

EMEA

12,497

3,700

945

17,142

USA

1,946

226

26

2,198

Other Americas

679

10

-

689

Americas

2,625

236

26

2,887

Asia Pacific

572

244

1,370

2,186






Total revenues

15,694

4,180

2,341

22,215






Timing of revenue recognition





At a point in time

-

1,011

2,341

3,352

Over time

15,694

3,169

-

18,863

4.2 Geographical areas

The Group's revenue from external customers and information about its non-current assets (excluding deferred tax), disaggregated by primary geography is detailed below:  


Revenue

Non-current assets

 

 

 

2018

£'000

Restated

2017

£'000

2018

£'000

2017

£'000

UK

3,764

2,824

8,186

7,158

Switzerland

3,054

2,995

4,352

4,276

Norway

4,501

4,532

14,628

15,043

Other EMEA

7,873

6,791

-

-

EMEA

19,192

17,142

27,166

26,477

USA

1,957

2,198

7

15

Other Americas

768

689

-

-

Americas

2,725

2,887

7

15

Asia Pacific

1,240

2,186

22

86


23,157

22,215

27,195

26,578

Revenues from external customers in the Group's domicile, the UK, as well as its major markets, EMEA, Americas and Asia Pacific, have been identified on the basis of the customer's geographical location. Non-current assets are allocated based on their physical location.

4.3 Information about major customers

There were no customers in 2018 or 2017 who contributed 10% or more of the Group's revenue.



 

4.4 Assets and liabilities related to contracts with customers

The Group has recognised the following assets and liabilities related to contracts with customers:




 

 

 


2018

£'000

2017*

£'000

1 Jan 2017*

£'000

Current contract assets relating to:





Recurring maintenance, hosting and rentals


11

23

-

Services including development


316

452

912

Licences


34

43

223

Loss allowance


(1)

(2)

-

Total contract assets


360

516

1,135






Current contract liabilities relating to:





Recurring maintenance, hosting and rentals


5,268

4,822

6,717

Services including development


890

1,350

316

Licences


202

1,666

1,584

Total contract liabilities


6,360

7,838

8,617

* Reclassified and remeasured amounts - see note 12 for explanations.



 

5   Analysis of expenses by nature

5.1 Expenses by nature

The following items have been charged/(credited) to the income statement in arriving at loss before tax from continuing operations:

 

 

 



Notes

2018

£'000

2017

£'000

Depreciation of property, plant and equipment


367

298

Amortisation of acquired intangible assets


1,283

1,559

Amortisation of other intangible assets


1,943

2,336

Loss on disposal of property, plant and equipment


42

5

Research and development costs expensed


4,064

 

5,418

Share-based payment (credit)/charge


(137)

9

Operating lease rental charges - land and buildings


1,222

1,310

Operating lease rental charges - others


3

7

Finance lease interest


64

-

Net foreign currency losses


25

135

Exceptional items

5.2

274

2,441

 

5.2   Exceptional items

 

 

 



Notes

2018

£'000

2017

£'000

Functional transformation costs




100

1,818

Contract disputes




-

623

Professional fees relating to overseas tax enquiry




174

-

Exceptional items charged to operating loss



5.1

274

2,441

 

Functional transformation costs

During 2018, the Group incurred functional transformation costs totalling £100,000 (2017: £1,818,000) comprising of £50,000 recruitment costs, and £50,000 legal and settlement costs, to align the organisational structure with the future strategy of the Group.

Contract dispute

During 2018, the Group made a provision of £nil (2017: £523,000) against a trade receivables balance and £nil (2017: £100,000) legal provision relating to certain client contract disputes.

Professional fees relating to overseas tax enquiry

During 2018, the Group incurred £174,000 (2017: £nil) for professional advice relating to the Norwegian tax enquiry.

 

 



 

6   Income tax

Income tax recognised in the income statement

 

 

 

 

 




2018

£'000

Restated

2017

£'000

Current tax






UK Corporation Tax at 19.00% (2017: 19.25%) on loss for the year



-

-

Adjustments in respect of prior years




-

24

Research and development tax credits - prior years



(351)

-

UK Corporation tax (credit)/expense



 (351)

24

Overseas corporation taxes



824

322

Total current tax expense




473

346







Deferred tax

 

 

 

 






Origination and reversal of temporary differences - current year    



191

(473)

Total deferred tax expense/(credit)




191

(473)

Total income tax expense/(credit)




664

(127)

 







 

The Group has an ongoing tax enquiry into prior years' transfer pricing methodology of an overseas subsidiary.  During the year, there has been further clarification on this matter however the underlying uncertain tax provision of £2.1 million remains management's best estimate of the likely outcome. The conclusion of the matter is uncertain as the Group has lodged an appeal with an independent review body in Norway. The appeal is based on two arguments; the nature and timing of the transfer of IP to the UK and the valuation of said IP. The maximum exposure to the Group if this appeal is unsuccessful is a further tax charge of £1.0 million. A payment of £0.6 million has already been made towards the liability and the Group has agreed a payment plan for the remaining amounts.

7   Earnings per share (EPS)

7.1 Basic and diluted EPS

 

 

 

Basic and diluted earnings per share

 




2018

Restated

2017                 

Earnings






Earnings for the purposes of basic and diluted EPS being net loss attributable to equity holders of the Parent Company (£'000)


(2,079)

(8,767)

Number of shares






Weighted average number of ordinary shares for the purposes of basic EPS ('000)

83,368

83,330

Effect of dilutive potential ordinary shares:






-       - Share options ('000)




-

-

Weighted average number of ordinary shares for the purposes of diluted EPS ('000)

83,368

330

83,330

330

Basic EPS (pence)




(2.49p)

(10.52p)

Diluted EPS (pence)




(2.49p)

(10.52p)

Basic earnings per share is calculated by dividing loss for the year attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the year. For diluted earnings per share, the weighted average number of shares is adjusted to allow for the effects of all dilutive share options outstanding at the end of the year. Options have no dilutive effect in loss-making years, and hence the diluted loss per share for the year is the same as the basic loss per share.

Basic and diluted EPS for the discontinued operation was a loss of 0.33 pence per share (2017: 2.31 pence loss per share).  

7.2   Adjusted diluted EPS

 

 

 

Adjusted diluted earnings per share

 

Notes

2018

Restated

2017                 

Earnings for the purposes of diluted EPS being net loss attributable to equity holders of the Parent Company (£'000)


(2,079)

(8,767)

Adjustments:  




Reversal of amortisation on acquired intangible assets (£'000)   


1,283

1,643

Reversal of share-based payment (credit)/charge (£'000)


(137)

11

Reversal of exceptional items (£'000)

5.2

274

2,441

Reversal of actual tax charge/(credit) (£'000)


664

(49)

Add Normalised tax at 15% (2017: 15%)


-

-

Net adjustments (£'000)


2,084

4,046

Adjusted earnings (£'000)


5

(4,721)

Adjusted diluted EPS (pence)

p


0.01p

(5.67p)

Adjusted diluted EPS for the discontinued operation was a loss of 0.33 pence per share (2017: 2.11 pence loss per share).

 



 

8   Borrowings

 

 

 

 




2018

£'000

2017

£'000

Current




233

-

Non-current




296

-

Total borrowings




   529

-

The Group leases various computer hardware and software with a carrying amount of £546,000 (2017: £nil) under finance leases expiring within two to three years. Under the terms of the leases, the Group has the option to acquire the leased assets for a nominal sum of £100 on expiry of the leases.

The finance leases are secured on the assets to which they relate.

Commitments in relation to finance leases are payable as follows:

 

 

 

 




2018

£'000

2017

£'000

Within one year




277

-

Later than one year but not later than five years




310

-

Minimum lease payments




587

-

Future finance charges




(58)

-

Total lease liability




529

-

The present value of finance lease liabilities is as follows:

 

 

 

 

 




2018

£'000

2017

£'000

Within one year




233

-

Later than one year but not later than five years




296

-

Minimum lease payments




529

-

 

 



 

9   Share capital and premium

 

 

 

Number of ordinary shares of £0.01 each

Share capital

£'000

Share premium

£'000

Total

£'000

Balance at 1 January 2017

83,082,887

831

37,099

37,930

Issued under share-based payment plans

285,000

3

187

190

Balance at 31 December 2017

83,367,887

834

37,286

38,120

Balance at 31 December 2018

83,367,887

834

37,286

38,120

The Company has one class of ordinary shares which carry no right to fixed income. The share capital of Brady plc consists only of fully paid ordinary shares with a nominal value of £0.01 per share. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at shareholders' meetings of Brady plc.

During the prior year, the Company issued 285,000 shares as a result of share options exercised with a weighted average exercise price of £0.67 per share for total cash consideration of £190,000.

 

10   Treasury shares

Treasury shares comprise own shares in Brady plc purchased and retained by the Company:

 

 

 



Number of ordinary shares of £0.01 each

Treasury shares

£'000

Balance at 1 January 2017



4,306

3

Balance at 31 December 2017



4,306

3

Balance at 31 December 2018



4,306

3

 



 

11   Other reserves

The following table shows a breakdown of the balance sheet line item 'other reserves' and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table.


Merger reserve

£'000

Merger relief reserve

£'000

Share-based payment reserve £'000

Capital reserve

£'000

Foreign exchange reserve       

£'000

Other reserves        

£'000

Balance at 1 January 2017                                                                                      

680

530

675

4

(3,777)

(1,888)

Exchange differences on retranslation of foreign operations

-

-

-

-

(1,419)

(1,419)

Exchange differences relating to discontinued operations

-

-

-

-

(57)

(57)

Total comprehensive loss for the year

-

-

-

-

(1,476)

(1,476)

Credit for equity-settled share-based payments

-

-

11

-

-

11

Transfer for exercised & forfeited share options

-

-

(361)

-

-

(361)

Transactions with owners

-

-

(350)

-

-

(350)

Balance at 31 December 2017

680

530

325

4

(5,253)

(3,714)

Exchange differences on retranslation of foreign operations

-

-

-

-

272

272

Exchange differences relating to discontinued operations

-

-

-

-

(27)

(27)

Total comprehensive income for the year

-

-

-

-

245

245

Release of credit for equity-settled share-based payments

-

-

(137)

-

-

(137)

Transfer for exercised & forfeited share options

-

-

(55)

-

-

(55)

Transactions with owners

-

-

(192)

-

-

(192)

Balance at 31 December 2018

680

530

133

4

(5,008)

(3,661)

 

 

 


12   Changes in accounting policies

This note explains the impact of the adoption of IFRS 9 and IFRS 15 on the Group's financial statements.

 

12.1 Impact on the financial statements

As a result of the changes in the entity's accounting policies, prior year financial statements had to be restated. IFRS 9 was generally adopted without restating comparative information. The reclassifications and the adjustments arising from the new impairment rules are therefore not reflected in the restated balance sheet as at 31 December 2017 but are recognised in the opening balance sheet on 1 January 2018. The following tables show the adjustments recognised for each individual line item. The adjustments are explained in more detail by standard below.

 

Consolidated income statement

For the year ended 31 December 2017


As originally reported

Impact of IFRS 15

Impact of IFRS 9

Restated


Before

exceptionals

Exceptionals

Total

Before

exceptionals

Exceptionals

Total

Before

exceptionals

Exceptionals

Total

Before

exceptionals

Exceptionals

Total


Reported

2017

£'000

Reported

2017

£'000

Reported

2017

£'000

2017

£'000

2017

£'000

2017

£'000

2017

£'000

2017

£'000

2017

£'000

Restated

2017

£'000

Restated

2017

£'000

Restated

2017

£'000

Revenue

22,926

-

22,926

(711)

-

(711)

-

-

-

22,215

-

22,215

Cost of revenues

(10,018)

(267)

(10,285)

166

-

166

-

-

-

(9,852)

(267)

(10,119)

Gross profit

12,908

(267)

12,641

(545)

-

(545)

-

-

-

12,363

(267)

12,096

Operating costs

(16,872)

(2,174)

(19,046)

-

-

-

134

540

674

(16,738)

(1,634)

(18,372)

Net impairment losses

-

-

-

-

-

-

(134)

(540)

(674)

(134)

(540)

(674)

Operating loss

(3,964)

(2,441)

(6,405)

(545)

-

(545)

-

-

-

(4,509)

(2,441)

(6,950)

Net finance expense

(22)

-

(22)

-

-

-

-

-

-

(22)

-

(22)

Loss before tax

(3,986)

(2,441)

(6,427)

(545)

-

(545)

-

-

-

(4,531)

(2,441)

(6,972)

Income tax

102

-

102

25

-

25

-

-

-

127

-

127

Loss for the year from continuing operations

(3,884)

(2,441)

(6,325)

(520)

-

(520)

-

-

-

(4,404)

(2,441)

(6,845)

Loss from discontinued operations

(1,922)

-

(1,922)

-

-

-

-

-

-

(1,922)

-

(1,922)

Loss for the year attributable to shareholders of Brady Plc

(5,806)

(2,441)

(8,247)

(520)

-

(520)

-

-

-

(6,326)

(2,441)

(8,767)

Other comprehensive income













Exchange differences on translation of foreign operations



(1,476)



-



-



(1,476)

Movement in actuarial valuation of defined benefit pension scheme



261



-



-



261

Total other comprehensive income



(1,215)



-



-



(1,215)

Total comprehensive income for the period



(9,462)



(520)



-



(9,982)


Consolidated statement of financial position restatement under IFRS 15

The statement of financial positions as at 1 January 2017 and 31 December 2017 have been restated due to the adoption of IFRS 15 and IFRS 9.


Reported

1 Jan 17

£'000

Impact of

IFRS 15

1 Jan 17

£'000

Impact of

IFRS 9

1 Jan 17

£'000

Restated

1 Jan 17

£'000

Reported

31 Dec 17

£'000

Impact of

IFRS 15

31 Dec 17

£'000

Impact of

IFRS 9

31 Dec 17

£'000

Restated

31 Dec 17

£'000

Non-current assets









Intangible assets

35,999

-

-

35,999

26,091

-

-

26,091

Property, plant and equipment

978

-

-

978

487

-

-

487

Deferred tax asset

58

398

-

456

-

423

-

423

Total non-current assets

37,035

398

-

37,433

26,578

423

-

27,001

Current assets









Trade and other receivables









Trade receivables, gross

4,482

-

-

4,482

3,607

-

-

3,607

Bad debt provision

(142)

-

1

(141)

(799)

-

2

(797)

Trade receivables, net

4,340

-

1

4,341

2,808

-

2

2,810

Amounts recoverable on contracts

1,135

(1,135)

-

-

352

(352)

-

-

Other receivables

219

-

(219)

-

179

-

(179)

-

Prepayments

832

-

(832)

-

1,027

-

(1,027)

-

Corporation tax recoverable

621

-

(621)

-

75

-

(75)

-

Other taxation receivable

150

-

(150)

-

180

-

(180)

-

Trade and other receivables

7,297

(1,135)

(1,821)

4,341

4,621

(352)

(1,459)

2,810

Other current assets

-

-

1,822

1,822

-

-

1,461

1,461

Contract assets

-

1,135

(1)

1,134

-

518

(2)

516

Cash and cash equivalents

7,343

-

-

7,343

4,089

-

-

4,089

Assets classified as held for sale

-

-

-

-

5,848

-

-

5,848

Total current assets

14,640

-

-

14,640

14,558

166

-

14,724

Total assets

51,675

398

-

52,073

41,136

589

-

41,725

Current liabilities









Trade and other payables

(12,669)

6,869

-

(5,800)

(10,734)

5,379

-

(5,355)

Contract liabilities

-

(8,617)

-

(8,617)

-

(7,838)

-

(7,838)

Provisions

-

-

-

-

(350)

-

-

(350)

Liabilities held for sale

-

-

-

-

(1,384)

-

-

(1,384)

Total current liabilities

(12,669)

(1,748)

-

(14,417)

(12,468)

(2,459)

-

(14,927)

Non-current liabilities









Deferred tax liabilities

(2,938)

-

-

(2,938)

(2,099)

-

-

(2,099)

Pension obligations

(2,732)

-

-

(2,732)

(2,494)

-

-

(2,494)

Total non-current liabilities

(5,670)

-

-

(5,670)

(4,593)

-

-

(4,593)

Total liabilities

(18,339)

(1,748)

-

(20,087)

(17,061)

(2,459)

-

(19,520)

Net assets

33,336

(1,350)

-

31,986

24,075

(1,870)

-

22,205

Equity attributable to owners of the parent company









Share capital

831

-

-

831

834

-

-

834

Share premium

37,099

-

-

37,099

37,286

-

-

37,286

Treasury shares

(3)

-

-

(3)

(3)

-

-

(3)

Total other reserves

(1,888)

-

-

(1,888)

(3,714)

-

-

(3,714)

Retained earnings

(2,703)

(1,350)

-

(4,053)

(10,328)

(1,870)

-

(12,198)

Equity attributable to shareholders of the Company

33,336

(1,350)

-

31,986

24,075

(1,870)

-

22,205

 

 

Consolidated cashflow statement restatement under IFRS 15

As a result of adoption of IFRS 15, certain reclassifications are required in relation to the composition of cashflows generated from/(used in) operations, however there is no overall change to the primary headings of the Consolidated cashflow statement.

 

13   Statement by Directors

 

While the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRSs') as adopted by the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs.

The financial information set out above, which was approved by the Board on 22 March 2019, is derived from the full unaudited Group accounts for the year ended 31 December 2018 and does not constitute the statutory accounts within the meaning of section 434 of the Companies Act 2006.

The Board of Brady plc approved the release of this preliminary announcement on 22 March 2019.

The Annual Report for the year ended 31 December 2018 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. The report will also be available on the investor relations page of the Group's website. Further copies will be available on request and free of charge from the Company Secretary.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
FR EASDLALNNEFF

Brady PLC Timeline

Article
March 25 2019

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