Brady is the largest Europe-based E/CTRM player. It provides a range of transaction and risk management software applications, which help producers, consumers, financial institutions and trading companies manage their commodity transactions in a single, integrated solution.
FY18 numbers were broadly in line, with revenues of c £23m (we forecasted £23.7m) and adjusted EBITDA (Brady definition) in line at £2.6m. Year-end cash at £4.6m was slightly below our £5.1m forecast as two projects were invoiced later than expected in the final days of 2018. Management remains confident on the outlook as the group stands to benefit from the streamlining and investment of the last few years. In December, Brady appointed Carmen Carey, currently non-executive director, as its new CEO. Ian Jenks will step back from executive chairman to being non-executive chairman. An initial priority for the new CEO will be developing the new sales strategy. The market opportunity is substantial and we believe Brady is well positioned to benefit from the significant sector consolidation.
Brady provides trading, risk and connectivity software solutions to the global commodity and energy markets – mining and oil companies, fabricators, traders, banks etc. The global E/CTRM market was worth c $1.65bn in 2016 (Comtech) and is forecast to grow at c 6% CAGR 2016-2020. Brady has a strong position in niche areas including commodity logistics, credit risk, metals (number one globally) and European energy, yet has a relatively modest market penetration overall (we estimate 1.2%).