Brady Regulatory News (BRY)

17 September 2012

Brady PLC

("Brady", the "Company" or the "Group")

INTERIM RESULTS

For the six months to 30 June 2012

Brady, the leading global provider of trading, risk management and settlement solutions to the energy, metals and soft commodities sectors, is pleased to announce its interim results for the six months to 30 June 2012.

Financial Summary:

1 Adjusted earnings per share is based on earnings excluding exceptional items, acquired intangible asset amortisation charges and share based compensation charges

2 Excluding exceptional items

Financial Highlights:

·; Sales revenue up 37% to £12.11 million (H1 2011: £8.84 million).

·; Recurring revenues up 40% to £6.71 million (H1 2011: £4.78 million) now comprising 55% of total revenue (H1 2011: 54%).

·; EBITDA before exceptional items up 43% to £1.78 million (H1 2011: £1.24 million) and operating result before exceptional items up 37% to £0.75 million (H1 2011: £0.55 million).

·; Adjusted earnings per share up 59% to 2.69p per share (H1 2011: 1.69p per share).

·; £7.8 million of cash at 30 June 2012 (equivalent to 10p per share) and no debt, increasing to £8.5 million of cash at 31 August 2012 (equivalent to 11p per share).

Operational Highlights:

·; A record eight significant new licence contracts signed in the first half and ten in the year to date. This compares with six significant new licence contracts signed in H1 2011 and 14 in FY 2011. The average licence value of a significant deal size in H1 2012 more than doubled compared to H1 2011.

·; Swift integration of the Navita and syseca acquisitions within the enlarged Brady Energy business, now under common leadership with clear operational and financial goals.

·; Success of the integration demonstrated by three of the new licence contracts being generated by the newly enlarged Brady energy business of which one was a cross-selling deal of a newly acquired solution into an existing Brady customer.

·; Further traction in commercialising Brady's cloud based solution.

·; Significantly stronger market position - Brady is now the largest energy and commodity trading and risk management ("ECTRM") technology company headquartered in Europe, the largest in metals globally, the fourth largest globally with the largest energy installed base in Europe (source: Commoditypoint) with a client base increased to more than 250 globally.

·; A total of 11 new client installations, throughout Europe, the Americas and Asia.

·; Continued investment in product enhancements, routes to market and infrastructure in anticipation of further anticipated growth.

Paul Fullagar, Chairman of Brady plc, commented:

"The Group has continued to deliver positive momentum, demonstrated by the signing of a record of eight new significant licence deals in what remain challenging economic conditions. A major focus in the period has been the completion of the integration of the Navita and syseca acquisitions to form the enlarged Brady Energy business. This was quickly completed and I am pleased to see that three of the significant new deals were energy deals and one of these was a cross-selling deal, demonstrating the clear benefits of increasing scale and the success of combining complementary businesses.

"The increase in recurring revenues to £6.7 million is very encouraging and the increased client base provides a solid and diversified foundation to continue to further grow the business. We continue to retain a very strong balance sheet position, with no debt. To complement anticipated organic growth, the Group is committed to seek further opportunities to enhance its product and customer base through selective acquisitions."

For further information please contact:

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 metals, soft commodities and agriculturals.

Brady has 25 years' expertise in the commodity markets with over 250 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 Group has continued to generate growth and positive momentum since the management team's appointment and the announcement of a new growth strategy in 2007.

We are particularly pleased to see that the pace of new deal signing is increasing, with a record eight significant new licence deals in the first half and ten in the year so far in spite of continuing challenging economic conditions. The average size of these licence deals more than doubled compared to the first half of 2011, evidence of Brady's increasing strength in the marketplace. This level of business provides a solid start to 2012 and good visibility for full year 2012 revenues.

Navita and syseca were acquired in the first quarter of 2012 and have already been fully integrated. It is satisfying to see that three of the significant new licence deals were energy deals and one was a cross-sale of a newly acquired solution into an existing Brady customer. This continues the track record of strong performance from newly acquired businesses and continues to demonstrate management's ability to crystallise tangible benefits from the cross-selling potential offered by complementary assets acquired.

We are particularly pleased to see a 37% growth in headline revenues with a 40% growth in recurring revenue levels, now comprising 55% of total revenues.

The Group continues to enjoy a strong financial position with net cash at 30 June of £7.8 million and no debt, increasing to £8.5 million and no debt at 31 August.

Now that the Energy acquisitions have been fully integrated and to complement the anticipated organic growth, the Group is committed to refocus efforts to seek further opportunities to enhance its product and customer base through selective acquisitions. The management team has a strong track record in identifying, executing, integrating and delivering improved performance from the acquisitions to date, including quickly realising the benefits from cross-selling. I look forward to reporting further updates in due course.

Paul Fullagar

Chairman

CHIEF EXECUTIVE'S REVIEW

I am pleased to provide a summary of the operational and financial highlights at Brady in the first half of 2012, together with the outlook for the rest of the year.

Strategy and Operations

The Group continues to expand its market presence, strengthen its product offering, improve routes to market and develop an expanding pipeline of new business opportunities. According to Commoditypoint, Brady is now ranked as the largest ECTRM company headquartered in Europe, the largest in metals globally, the fourth largest globally with the largest energy installed base in Europe. The Group provides solutions across multiple assets classes including energy, metals and soft commodities and is able to deliver across multiple geographies.

Approximately 83% of our revenues derive from EMEA, 10% from the Americas and 7% from APAC, with approximately 20 of our customers now utilising Brady's Cloud based solutions. The Group has considerably strengthened its presence in mainland and northern Europe following recent acquisitions and is in the process of expanding its Singapore sales and service operations in order to capitalise on buoyant market conditions in the APAC region. Local operations in the Americas continue to support strategically important American and global clients and the Group has plans to increase its sales presence in the Americas to take advantage of anticipated market strengthening in that region. We continue to believe in the need to have sales, delivery and support personnel located close to our key customers and have demonstrated the ability to sell and implement across the globe.

Brady has a first class team and we have strengthened operational management with dedicated divisional leadership for each of the energy, metals and soft commodity business units. These business units are supported by central product management, technology, marketing, finance, IT and human resource functions to ensure common approaches, consistency and efficiency throughout the Group. This structure should allow us to capitalise on what we believe is a unique and compelling opportunity to grow Brady's position within the marketplace, both organically and by acquisition. We expect that this will create an attractive investment opportunity and will deliver further significant value to our shareholders.

Acquisitions

The Group completed its acquisitions of Navita and syseca in the first quarter of the year. These acquisitions have been swiftly and fully integrated into the enlarged Brady Energy business. The speed of execution was greatly assisted by much of the preliminary integration work being undertaken prior to completion of the acquisitions. The business has a strong leadership team and has a clear strategic direction with firm operational, commercial and financial goals. The focus has quickly moved from the integration activity to generating new business and this resulted in securing three of the Group's eight significant new licence deals signed in the first half and the enlarged Brady Energy business is already performing ahead of initial expectation. One of the significant new licence deals was the cross-sale of a newly acquired solution into an existing Brady customer. This continues the trend started by earlier acquisitions of quickly identifying and securing cross-selling opportunities.

New Contracts

The Group has signed ten significant new licence contracts in the year so far, with eight significant deals in the first half year. This represents an accelerated pace from 2011 when the Group signed six significant new licence contracts in the first half year and fourteen in the full year. These deals were distributed across the energy, metals and soft commodity sectors, demonstrating the value of a wider portfolio. The Group has been able to secure higher priced terms by having an expanded offering and a stronger market presence, with average deal sizes being more than double those in the first half of 2011. The solutions that the Group has acquired are clearly benefiting from the Group's stronger distribution capabilities.

Brief details of the deals are:

·; Agder Energi, one of the largest energy groups in Norway, selected Brady's ETRM system to manage their financial and physical power trading operations in the Nordic energy market, in addition to the Brady Energy Power Scheduling solution which will be deployed to manage Agder's scheduling operations in Germany. This represented a cross-sell of a newly acquired offering to Agder, an existing Brady Energy customer;

·; One of the world's leading diversified commodity trading houses, a leader in managing the global supply chain of agricultural and energy products, metals and minerals, selected Brady's solution to support its base metals trading, logistics and hedging activities;

·; A leading global trader of raw materials deepened its long standing relationship with Brady, with a solution for raw materials trading and risk management, providing the tools to maximise profit, measure performance and monitor positions with effortless and automated management of daily activities;

·; Codelco, the world's largest producer of copper and molybdenum, selected Brady's solution to manage its global metal trading position and risk management across its global activities, through Brady's cloud based solution;

·; Freepoint, a physical commodity trading and marketing company, selected Brady Energy's EU and UK power scheduling solution to handle its power scheduling requirements in the UK, Germany, France, Czech republic, Slovakia, Hungary, Romania, Austria, Netherlands and Belgium;

·; The Group is partnering with a major global trading company to further enhance its real-time trading and risk solution;

·; A Nordic company, a leader in the integration of bio and forest industries, extended its reliance on Brady by selecting Brady Energy's Structuring Manager for supporting its diversification into cross-commodity related trading to support the company's gas trading operations in central Europe; and

·; A global securities and investment banking group which is highly active in the exotic options market, selected Brady's newStructured Product trading and risk management solution to support its market-making and risk management requirements.

Since 30 June, Brady has signed two further significant licence deals. Brief details of the deals are:

·; Transamine, one of the oldest independent and privately held commodity trading companies specialising in non-ferrous raw materials, as well as tin, cobalt, nickel, precious metals, related by-products and residues, selected Brady to provide them with a single automated, centrally-managed robust solution that can be accessed from various locations, enabling several users efficient access to the fully integrated contract administration portal; and

·; A global securities and investment banking group extended its Brady solution functionality with a cross-product margining solution for its global metals trading operations both on and off exchange, providing end of day calculations that are used to calculate the overall margin calls.

These contracts demonstrate the Group's ability to provide complex solutions across the range of commodity asset classes, across multiple geographic regions and to identify and deliver new business to both new and existing clients, including Brady's cloud offering, and to cross-sell. With a customer base that now exceeds 250, including many of the world's largest financial institutions, producers, trading companies, energy generators and mining corporations, we believe there is strong potential for deeper penetration into existing client accounts, further cross-selling and growth from new clients.

Product Initiatives

The Group now has nearly one hundred development heads and is pleased with the progress made in the first half of the year. This culminated in a number of new product releases which build upon the success of the previous year's initiatives and further validate the Group's strategy to utilise service oriented architecture to deliver product initiatives in response to clear market drivers and in response to customer demand.

The Group launched its enhanced cloud based platform, which has been selected by one of the world's largest copper producers to manage its metal trading position and risk management across its global activities. The cloud based solutions deliver industry leading scalable infrastructure, top class resilience and robust security as required for today's high availability environments. Clients can easily access any parts of the Group's solution set and usage can be extended rapidly to meet new business needs. This flexibility combined with shorter implementation times and dramatically reduced internal IT infrastructure costs deliver a quicker return on investment and significantly reduced total cost of ownership to our customers. Brady is pleased to see an increasing number of customers taking advantage of Brady's cloud based SaaS model.

In addition, in today's uncertain market conditions, counterparty risk is at the forefront of business leaders' thinking. The Group has developed (and signed its first client) for collateral management, allowing metals, energy or soft commodity customers to manage the collateral used for financing commodity and energy purchases.

Transparency, consistency and availability of market data within organisations is a key factor in the new regulatory driven environment. The Group has successfully delivered its new cross-commodity curve generation and modelling service, which is in the process of being deployed in one of the world's leading trading companies as a key component of the solution architecture, providing a central single point of access to market data aggregated from external source, curve modelling and providing consistent Exchange traded and OTC instrument prices.

Assessing and managing market and counterparty risk continue to be at the forefront in the current economic climate. To be most effective in today's volatile Commodity markets, risk analysis needs to be accurate and available in real-time as market and counterpart exposures move. The Group is delighted that it is partnering with a major global trading company to further enhance its real-time trading and risk solution. This solution, already part delivered, embraces the latest Microsoft and Oracle technologies in web development and process optimisation.

Market Outlook

We believe that the fundamental market drivers for our business remain strong. Our customers continue to face increasing regulatory and accounting compliance requirements and a dramatic increase in electronic trading which require technology innovation. Our energy customers face a shift towards the production of a greater proportion of renewable energy with the inherent increase in unpredictability and in the scale of data and risk management. Our broad offering for the energy, metals and soft commodities markets is well positioned to address the needs of our diversified customer base in the sectors, comprising trading companies, producers, banks, brokers and fabricators. Whilst the macro outlook for banking continues to remain uncertain, banks now only represent approximately 10% of Group revenues and is therefore not anticipated to have a material impact. The market as a whole is still a tough environment but the Group has maintained good momentum in securing new business in the first half year which it hopes to continue in the second half year.

Financial Results

Total revenues for the first half of 2012 were £12.11 million, an increase of 37% on the £8.84 million for the first half of 2011 and 7% higher than the 30% increase indicated in the Group's trading statement on 18 July 2012. Within the total, £6.71 million (55% of total revenue) was recurring revenue, an increase of 40% on the £4.78 million (54% of total revenue) for the same period in 2011. The Group is pleased with this growth and is committed to continue its focus on maximising recurring revenues (which comprises support and maintenance and rental fees). A further £3.45 million (29% of total revenue) was for professional services and development revenues, an increase of 10% on the £3.15 million (36% of total revenue) for the same period in 2011. Whilst this growth level is positive, it is below expectation as the Group has seen a challenge in the current environment in unlocking clients' budgets for service work. Finally, a further £1.95 million (16% of total revenue) was for licence sales, an increase of 115% on the £0.91 million (10% of total revenue) for the same period in 2011. It has been positive to see an increase in both deal-flow and deal size, although the phased transition from an up-front licence model to a rental model has been slower than anticipated in the first half of 2012 as the Group has focussed on closing the near-term deals under the up-front licence model. As noted in the trading statement, the average deal size for deals secured in the first half of 2012 has more than doubled compared to the same period in 2011. Taking into account the 2012 acquisitions, there was organic revenue growth of 1% at constant exchange rates for the first half of 2012 compared to the same period in 2011 and, adjusting for licence revenue not yet recognised on secured deals, organic revenue growth would have been 6% for the first half of 2012 compared to the same period in 2011.

The gross margin for the first half of 2012 increased to 58% compared to 50% for the first half of 2011, largely driven by the higher proportion of licence revenue in the period.

The Board continues to tightly manage the Group's cost base. The Group is committed to building sustained growth in underlying profitability by ensuring that expenses growth remains slower than revenue growth. Recruitment has been heavily focussed on revenue generating roles with tight control of headcount costs.

The EBITDA before exceptional items for the first half of 2012 was £1.78 million compared to £1.24 million, an increase of 43% and higher than the flat EBITDA indicated in the Group's trading statement on 18 July 2012. This is significantly better than the flat EBITDA indicated in the Group's trading statement of 18 July 2012. The EBITDA margin for the first half of 2012 was 15%, a modest increaseon the 14% for the first half of 2011.

Operating profit for the first half of 2012 was £0.75 million prior to the exceptional items compared to £0.55 million for the first half of 2011, an increase of 37%. The operating margin for the first half of 2012 remained flat at 6% in spite of the increased acquired asset amortisation charges. Profit before taxation for the first half of 2012 was £0.76 million prior to the exceptional items compared to £0.58 million for the first half of 2011, an increase of 32%. The profit before tax margin for the first half of 2012 also remained flat at 6% in spite of the increased acquired asset amortisation charges.

There was again a negative effective tax rate for the first half of 2012 as there was for the first half of 2011. Although a proportion of profits are being generated in higher taxed jurisdictions such as Norway and Switzerland, the Group continues to benefit from the attractive research and development tax credit regime in the United Kingdom which contributed to significantly reduce the Group's overall tax rate in the period. The Group also inherited unutilised tax losses (which were not paid for) following its acquisition of Navita and the Group has benefited from deferred tax credits associated with the amortisation of acquired intangible assets and capitalisation of development costs.

Profit after taxation for the first half of 2012 prior to the exceptional items was £0.90 million, compared to £0.74 million for the first half of 2011, an increase of 21%.

Adjusted earnings per share for the first half of 2012 prior to the exceptional items were 2.69 pence compared to 1.69 pence for the first half of 2011, an increase of 59%. Basic earnings per share for the first half of 2012 prior to the exceptional items were 1.27 pence compared to 1.37 pence for the first half of 2011, a decrease of 7%. In March 2012, following strong investor support, the Company raised sufficient monies in its share placing to fund the entire Navita acquisition rather than utilising any of its own cash resources, thus creating a dilutive effect on the earnings per share.

The Group incurred £1.59 million of exceptional costs in the period: firstly, transaction costs in relation to the acquisitions of Navita and syseca totalled £0.48 million. Secondly, although essentially accounted for in the negotiated purchase price, £0.39 million of the reorganisation costs incurred by Navita are required to be expensed under IFRS rather than being incorporated into the opening balance sheet. Finally, the Group notified the market on 31 August that the Group was in a payment dispute with a new customer that signed in 2011. The Company has taken a prudent view by making full financial provision for the net amounts due which total £0.72 million including estimated legal fees. The Company will consider all possible legal avenues for collection of the outstanding amounts and will advise the market accordingly.

The Group continues to enjoy a very strong balance sheet with net cash balances at 30 June 2012 of £7.8 million increasing to £8.5 million at 31 August 2012. The Group continues to be debt free.

The Group utilised cash from operations of £2.16 million or £1.29 million excluding exceptional items compared to cash generated of £1.96 million for the first half of 2011. Client receivables totalling £1.53 million were anticipated to be collected by 30 June but were in fact banked in early July. Taking these items into account, the Group would have generated cash from operations before exceptional items of £0.24 million. The Group continues to focus on tight financial management in order to maximise cash collection and optimise working capital and is comforted that the vast majority of its 250 clients are strong blue-chip companies.

The Group paid an increased dividend in May 2012 of £1.21 million, compared to £0.76 million paid in May 2011, an increase of 59%. Consistent with prior years, the Board is not recommending the payment of an interim dividend for 2012.

Outlook

The Board is pleased with the Group's progress in the first half of 2012 showing continued momentum in new deal signings, including a record of eight significant new contracts signed. This continues a track record of solid growth and increased performance and demonstrates further success of the strategy adopted in late 2007. The Board is pleased to see the swift integration of the Navita and syseca acquisitions into Brady Energy and particularly pleased to see the business contributing three of the eight significant new licence deals and that one of them was a cross-sell of acquired product into an existing Brady customer. Following the substantial reorganisation in the Brady Energy business unit, the Group is expected to benefit from the reduced cost base going forward.

In spite of the continued challenging business conditions, the Group expects further growth of the sales pipeline and to translate this pipeline into further new licence contracts. The Group's trading continues to be in line with the Board's expectations for the full year. 

There has been a revenue mix change is the first half of the year and the Group anticipates some correction to the levels of service work in relation to the increased deal-flow already signed and anticipated to be signed. The Group also expects to gain momentum in its transition from an up-front licence model to a rental model which is seen as preferred by customers.

Overall, the Board believes that the ECTRM market remains attractive with good growth prospects. Brady has continued to increase its scale and believes there is a very attractive opportunity to further consolidate a fragmented marketplace and to generate more value for shareholders. The Group has been careful to spend the required time bedding in the new energy acquisitions but is now continuing to look for further opportunities to enhance its product offering and build on its customer base through selective acquisition.

Gavin Lavelle

Chief Executive Officer

Selected explanatory notes

1. Nature of operations and general information

Brady plc and its subsidiaries' principal activity is the provision of trading and risk management solutions to the energy, metals and commodities industries, through the delivery of customer focused software and services.

The Group provides the leading trading and risk management software for global energy, metal and commodity markets. On a single platform the Group provides a complete integrated solution supporting entire commodities trading operations.

Brady plc, a limited liability company, is the Group's ultimate parent company. It is registered in England and Wales. The address of Brady plc's registered office is 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE.

These condensed consolidated interim financial statements have been prepared using the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union and as issued by the International Accounting Standards Board. They do not include all of the information required for full annual financial statements as defined in Section 434 of the Companies Act 2006, and should be read in conjunction with the Consolidated Financial Statements of the Group as at and for the year ended 31 December 2011. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006. The Consolidated Financial Statements have been filed with the Registrar of Companies and are available on the Group's website, www.bradyplc.com.

Brady plc's shares are listed on the London Stock Exchange's AIM. Brady plc's consolidated interim financial statements are presented in British pounds (£), which is also the functional currency of the ultimate parent company.

2. Accounting policies

The accounting policies applied by the Group are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2011.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

3. Sales revenue fluctuations

The ability to predict the timing of large contract closures is inherently difficult. The Group's product offerings are important software applications and new customers need to carefully evaluate the software before placing an order. This, together with the Group's revenue recognition policy, creates long lead times and the potential for unpredictable fluctuations in sales revenue attached to licence sales.

4. Segment analysis reporting

The Group sells trading, risk management and settlement solutions to the energy, metals and commodities sectors and makes sales to a variety of global destinations. An analysis of sales revenue by geographical market is given below:

The Group generates revenue from software licence sales, recurring licence rental and maintenance fees and the provision of associated services and development. Revenue can be analysed as below:

5. Share issues

The Company made various allotments of ordinary 1p shares during the period on the exercise of various share options. This increased the Company's ordinary shares issued and fully paid at the end of the period under review by 1,185,955 (year ended 31 December 2011: 293,750).

In addition, the Company raised £17.97 million gross in March 2012 following the placing of 23,338,233 ordinary 1p shares at 77 pence per share, or £17.11 million net of fees.

In addition, the Company allotted 918,762 ordinary 1p shares during the period as part of the acquisition of Navita in March 2012 and 675,951 ordinary 1p shares during the period as part of the acquisition of syseca in February 2012.

6. Share buyback

During the period under review, the number of ordinary shares held in treasury has remained at 4,306.

7. Earnings per share

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Brady plc divided by the weighted average number of shares in issue during the period. All earnings per share calculations relate to continuing operations of the Group. Separate calculations have been prepared related to the profit before and after exceptional items.

The calculation of the diluted earnings per share is based on the profits attributable to the shareholders of Brady plc divided by the weighted average number of shares in issue during the period, as adjusted for dilutive share options. All earnings per share calculations relate to continuing operations of the Group. Separate calculations have been prepared related to the profit before and after the exceptional items.

The calculation of the adjusted earnings per share is based on the pre-tax profits attributable to the shareholders of Brady plc, before exceptional items, amortisation of acquired intangible assets and share based compensation charges, which is adjusted for actual tax rates, divided by the weighted average number of shares in issue during the period. All earnings per share calculations relate to continuing operations of the Group.

8. Dividends

During the period ended 30 June 2012, Brady plc paid dividends of £1,205,734 to its equity shareholders (period ended 30 June 2011: £759,000).

9. Exceptional Items

During the period exceptional costs can be summarised as follows:

10. Goodwill

The net carrying amount of Group goodwill can be analysed as follows:

There were no changes in the net carrying amount of purchased goodwill. Changes in the net carrying amount of goodwill on consolidation can be summarised as follows:

11. Other intangible assets

Intangible assets comprise the following:

The carrying value of intangible assets can be analysed as follows to the following cash generating units: 

Changes in the net carrying amount of Group intangible assets can be summarised as follows: 

12. Cash and cash equivalents

Cash and cash equivalents comprise the following:

13. Acquisitions

Navita AS

On 9 March 2012 the Group acquired the entire issued share capital of Navita AS ("Navita"), a company incorporated in Norway, with subsidiary operations in US, Canada and the UK. Navita is a leading provider of systems to the energy markets, focussing on physical power and carbon emission trading and has clients based in Europe and North America.

The net assets and liabilities acquired were as follows:

The total consideration of £17,197,000 net of cash acquired of £1,601,000 and debt acquired of £451,000 was £16,047,000. The cash consideration paid in the period of £16,748,000 net of cash acquired of £1,601,000 and debt acquired of £451,000 was £15,598,000.

Included in the fair value adjustment to liabilities was a reduction of £133,000 in the provision for reorganisation costs in relation to reorganisation costs that were accrued as a direct consequence of the acquisition of Navita by the Company, which under IFRS are required to be expensed. A total of £388,000 has been expensed as exceptional reorganisation costs. Included in the fair value adjustment to assets was a reduction of £4,534,000 in the value of capitalised development costs relating to projects that will not be carried forward.

Included in the fair value adjustment to liabilities was a £124,000 increase in deferred income in order to align Navita's revenue recognition policies with those of the Group.

Trade and other receivables included trade receivables of £1,914,000 net of a doubtful debt provision of £54,000, all of which is anticipated to be collectible.

Following a detailed review of the fair value of assets and liabilities acquired, in accordance with IFRS3 Business Combinations the Group has recognised two intangible assets totalling £7,645,000 which are customer contracts and software, both of which are being amortised over their estimated economic lives of ten years. The customer contracts have been valued at £3,033,000 and the software for future customer resale has been valued at £4,612,000.

Goodwill of £11,108,000 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The goodwill arising on the acquisition is largely attributable to the incremental sales synergies anticipated to be associated with being part of the Group and the ability to sell and cross sell with a larger combined sales force.

As part of the acquisition, the Group agreed to adjust consideration against working capital above or below an agreed threshold that was retained in the business at completion. Following a completion accounts verification process, an amount of £378,000 was agreed to be repaid by the vendors of Navita in relation to a shortfall in working capital. This amount was received in August 2012.

Transaction costs of £356,000 in related to this acquisition were expensed as exceptional transaction costs.

syseca AG

On 10 February 2012 the Group acquired the entire issued share capital of syseca AG ("syseca"), a company incorporated in Switzerland. syseca provides up-to-date electricity physical trading capabilities and connectivity to most European Transmission System Operators (TSO's) and has clients within Europe.

The net assets and liabilities acquired were as follows:

The total consideration of £1,500,000 net of cash acquired of £703,000 was £797,000. The cash consideration paid in the period of £685,000 net of cash acquired of £703,000 was equivalent to negative £18,000.

The fair value adjustment of £167,000 to liabilities was in relation to a shortfall in pension liabilities under pension schemes which technically redefined as defined benefit pension plans under IFRS.

Trade and other receivables included trade receivables of £136,000, all of which is anticipated to be collectible. Included in the fair value adjustment to assets was a reduction of £67,000 in the value of capitalised development costs relating to projects that will not be carried forward.

Following a detailed review of the fair value of assets and liabilities acquired, in accordance with IFRS3 Business Combinations the Group has recognised two intangible assets totalling £748,000 which are customer contracts and software, both of which are being amortised over their estimated economic lives of ten years. The customer contracts have been valued at £166,000 and the software for future customer resale has been valued at £582,000.

Goodwill of £697,000 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The goodwill arising on the acquisition is again largely attributable to the incremental sales synergies anticipated to be associated with being part of the Group and the ability to sell and cross sell with a larger combined sales force.

As part of the acquisition, the Group agreed to pay additional consideration against advance pension fund contributions and surplus working capital above an agreed threshold and that was retained in the business at completion. Following a completion accounts verification process, an amount of £233,000 was agreed and paid to the vendors of syseca in the period in relation to this.

Transaction costs of £126,000 in related to this acquisition were expensed as exceptional transaction costs.

14. Financial Statements

The financial information for the year ended 31 December 2011 included in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory accounts for the year ended 31 December 2011 have been filed with the Registrar of Companies. This statement can be obtained from the Company's registered office at 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE and will be available on the Company's website www.bradyplc.com.