Brady Regulatory News (BRY)

12 March 2012

Brady plc

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

PRELIMINARY RESULTS

For the year ended 31 December 2011

Brady plc (BRY.L), the leading global provider of trading, risk management and settlement solutions to the energy, metals and soft commodities sectors, is pleased to announce its preliminary results for the year ended 31 December 2011.

Financial Summary:

Financial Highlights:

·; Sales revenue increased 72% to £19.16 million (2010: £11.12 million), including an increase in recurring revenues of 147% to £9.79 million (2010: £3.96 million); 

·; EBITDA before exceptional transaction costs increased 78% to £3.70 million (2010: £2.08 million); and

·; Earnings per share increased 111% to 3.57 pence per share (2010: 1.69 pence per share). Adjusted earnings per share, as calculated by market analysts 2 increased to 5.75 pence per share (2010: 5.68 pence per share).

Operational Highlights:

·; A record 14 significant new licence contracts signed in the year compared to ten in 2010;

·; 25 successful installations or upgrades completed in Europe, the Americas and Asia;

·; Successful integration of Viz Risk Management AS (since renamed "Brady Energy") acquired in December 2010, extending commodity asset class coverage to include energy markets, primarily electricity, gas, coal, and emission certificates; and

·; Following the year-end, the successful acquisitions of Navita AS ("Navita") and syseca AG ("syseca") and an £18 million share placing

Paul Fullagar, Chairman of Brady plc, commented:

"The Group has continued to deliver strong growth in both revenue and underlying profitability in 2011 and has secured an increased number of new client wins, all the more encouraging given the generally challenging economic conditions. The Group's acquisition of Brady Energy in December 2010 has continued to exceed expectations and we are delighted with the shareholder support we received for the recent £18 million share placing which allowed us to complete the transformational acquisition of Navita in March 2012."

I look forward to reporting further positive progress in the coming months."

For further information please contact:

1 EBITDA before exceptional transaction costs comprises operating profit before depreciation, amortisation and exceptional transaction costs

2 Adjusted to exclude share based payments, amortisation of acquired intangible assets, exceptional items and normalised tax

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

For 2011, the Group continued to deliver significant growth in revenues and underlying profitability through both organic growth and successful acquisitions. The Directors believe that this demonstrates the ongoing success of the business plan laid out in 2008 and provides further momentum following the strong performance in 2010. The positive momentum in new business resulted in a record number of new licence deals in the year, which is very encouraging given the continuing challenging economic conditions. These deals are detailed further in the Chief Executive's Review.

The Group's underlying markets appear strong and growing, with the Group being well placed to capitalise on what we see as an attractive opportunity. The Group has established a world leading position in the commodities and energy sectors and is well placed to continue to build on this, as has been demonstrated by the recent acquisitions of Navita and syseca in early 2012. The Group has continued to strengthen its routes to market, product offering, delivery capability and product management and latest technologies.

Brady Energy was acquired in December 2010 and, having been quickly and successfully integrated, has performed above management's expectations. Navita was acquired in March 2012 and syseca in February 2012, both being highly complementary to the Group's existing energy business. The integration of these acquisitions with the existing Brady Energy business was planned before completion of the acquisitions and is already underway and progressing well. The Board believes that the Navita acquisition will be transformational for Brady and, whilst the Group continues to look for further opportunities to lead the consolidation of the sector, it recognises the need to carefully bed down this acquisition.

Following the share placing in December 2010, the Group has enjoyed a strong financial position during 2011 with substantial cash balances and no debt. The Board was very pleased with the continuing endorsement of the Group's strategy, as evidenced by strong support for the £18 million share placing completed in March 2012 and is pleased to welcome a number of new shareholders.

People

I would like to thank all of our Directors and employees for their efforts during a very busy year delivering further impressive growth and a strong performance. Their commitment, loyalty and hard work continues to be very much appreciated and will remain vital to support further positive progress.

Clients

Brady has now become the largest European headquartered company in the Energy and Commodity Trading and Risk Management ("ECTRM") software market, with the largest number of European Energy clients and is ranked global number one in the metals market. The Board appreciate the ongoing support from the Group's 250 global clients.

Investors

Brady is the only publicly quoted ECTRM software provider. The Board is delighted with the continued support from our investors, as further demonstrated by the recent £18 million share placing.

Conclusion

The Board continues to see the energy and commodity trading market as a highly attractive market opportunity. The Group has a clear growth strategy and has demonstrated strong execution in recent years. There is an expanding customer pipeline and the Group remains focused on winning business from new clients and securing further licence business and service engagements from existing clients, whilst actively pursuing further attractive acquisition opportunities.

We look forward to building on the success achieved in 2011 and reporting positive progress during 2012.

Paul Fullagar

Chairman

CHIEF EXECUTIVE'S REVIEW

I am very pleased to announce another successful year of continued strong growth and progress from the Group. Despite continued uncertain macro economic conditions including uncertainty around the Eurozone the energy and commodity markets are providing relatively good trading conditions. Brady has continued to win attractive business around the world with some of the leading names in the marketplace, including its first deals in Hong Kong, Singapore and North Africa. Brady's asset class coverage has expanded to include energy, in particular electricity, gas, coal and emission certificates and continues to be enhanced. Brady's business is well balanced across different asset classes and we are seeing growth in cross-asset and multi-asset trading. This, combined with greater geographical coverage, is allowing us to capitalise on the significant potential cross selling opportunities from our larger customer base. Our customer base exceeded 150 at the end of 2011 and has further increased to approximately 250, following the 2012 acquisitions of Navita and syseca. The tangible benefits of cross-selling have been clearly demonstrated by our earlier acquisitions and continue to provide a compelling rationale for our desire to consolidate a fragmented marketplace.

I believe we have a first class team and a unique opportunity to maintain and grow this world leading position within our chosen markets, both organically and via acquisition. We anticipate that delivery on this strategy will create an attractive investment opportunity and create further significant value for our shareholders.

I am pleased to provide a summary of the financial and operational highlights in 2011, together with an outlook for 2012:

Financial Highlights

·; Sales revenues increased by 72% to £19.16 million (2010: £11.12 million)

·; Recurring revenues increased by 147% to £9.79 million (2010: £3.96 million), comprising 51% of total revenues (2010: 36%);

·; EBITDA before exceptional transaction costs increased by 78% to £3.70 million (2010: £2.08 million). Operating profit before exceptional transaction costs increased by 56% to £2.36 million (2010: £1.51 million) and operating profit increased by 239% to £2.03 million (2010: £0.60 million);

·; Basic earnings per share increased by 111% to 3.57 pence (2010: 1.69 pence). On a fully diluted basis this equates to an increase of 112% to 3.45 pence (2010: 1.62 pence). Basic earnings per share before exceptional items decreased by 13% to 4.17 pence (2010: 4.82 pence). On a fully diluted basis this equates to a decrease of 12% to 4.04 pence (2010: 4.61 pence);

·; Net cash resources at the end of the year were £10.3 million contributing to a very strong balance sheet with no debt; and

·; Proposed final dividend up 7% to 1.5 pence per share (2010: 1.4 pence per share).

These financial highlights are discussed in more detail in the Financial Review.

Operational Highlights

2011 has seen a number of successful commercial activities:

·; The Group has successfully increased its market share in the ECTRM market. We believe we are now the largest native European ECTRM software provider, the fifth largest globally by revenue, number one in metals globally and the largest in Europe by revenue and number of client installs;

·; In total a record 14 significant new licence deals were signed in 2011 (compared to 10 in 2010), across all of our key business lines - metals, energy and soft commodities, and in all our sales territories - EMEA, Americas and APAC; and

·; 25 client installations have either gone live or been upgraded.

These highlights are reviewed in more detail below.

Significant new licence contracts

The Group signed 14 significant new licence contracts in 2011, as summarised below, compared to ten in 2010. Brief details of these deals are summarised below:

EMEA

Despite the backdrop of uncertainty in the Eurozone, new deal signatures continued. There appears to be a trend of traders moving from banks and joining independent trading companies. Aligned with volatile market conditions, which is a positive driver for traders, Brady's clients have delivered good trading results. Significant new deals in 2011 comprised:

·; Statoil, one of the world's largest producers and suppliers of oil and gas in Scandinavia, expanded the scope of its contract for physical energy functionality in Germany and Scandinavia;

·; KGHM Pollska Miedz SA, the largest European copper producer and the world's third largest silver producer, selected Brady's raw materials trading and risk management solution to manage its raw materials purchasing activities, a good example of cross-selling as it is an existing Brady client;

·; RAO Nordic Oy in Finland, a subsidiary of one of the largest Russian energy companies, selected Brady Energy's trading and risk management solution to support its risk management requirements;

·; Holmarcom Group, a diversified Moroccan holding company, opted to install a Brady solution to manage its grain trading positions as well as to manage the complete supply chain management cycle for its grain logistics from the field to the ultimate delivery point;

·; Man Brothers Financial Institution, a rapidly growing bank based in Geneva, selected Brady's solution to handle its trade finance operations, in particular to integrate the bank's financial instruments, reduce operational risk, improve transparency and support decision making and governance;

·; One of the world's largest trading companies and an existing client significantly increased its user base by acquiring additional Brady licences; and

·; M3 Capital AS, a newly established hedge fund specialising in trading energy products in the Nordic power market, selected Brady's energy solution for their core energy trading and portfolio management activities.

APAC

I am delighted to report further success in APAC following the Group's initial first sales investment in the region two years ago. Overall, Asia and Australia appear to have been less impacted than the Western economies by recent global events. Given that approximately half of the world's population live in South East Asia and with Australia being so resource rich, Brady sees APAC as a very important and fast growing region. Significant new deals in 2011 comprised:

·; Singapore-based Yarlun Capital selected Brady's front-to-back office solution for managing its newly launched commodities fund;

·; Australian Bullion Exchange ("ABX") opted for a Brady solution to enable it to bring bullion trading to the private investor. ABX and Brady have agreed a long-term partnership where Brady will become the core system for the exchange's infrastructure and subsequently extended its use of Brady solutions with two further deals; and

·; A leading Hong Kong headquartered metal trading company, highly active in the Greater China market, selected Brady's trading and risk management solution to support its risk management requirements.

Americas

Sales in the Americas remain challenging given the overall market conditions, which has led to an overall delay in clients' commitments to expenditure. However, I believe that the US will be the first of the major Western economies to recover, offering potential future business and the Group is already witnessing a pick-up in interest. Significant new deals in 2011 comprised:

·; Riceland, one of the world's largest rice miller and marketers, selected Brady's trading and risk management solutions to manage their futures and options trading, processing and margin management in North America; and

·; Global Capital Commodities, selected Brady's trading and risk management solutions to manage its futures and options trading for base metals.

Following the acquisition of Brady Energy in December 2010 and the subsequent acquisitions of Navita and syseca in early 2012, the Group has further increased its sales team to thirteen posts, five of which will be dedicated to the Brady Energy business. With approximately 250 customers, including a number of the largest financial institutions, producers, trading companies, energy generators and mining corporations in the world, we believe this represents substantial potential for further new client deals and cross-selling.

Delivery

Having secured new business, the Group recognises the critical need to successfully install and deliver its solutions to its clients and to provide them with ongoing support. This has been demonstrated on a global basis with 25 clients either going live or upgrading, including clients in Europe, North and South America, North Africa and Asia. The Group already has strong service team presence in four locations in Europe and North America and has just established a local service organisation in our Singapore hub in the APAC region in order to capitalise on identified opportunities from the client base.

Services revenue growth in 2011 was 15%. We continue to believe in the importance of locating sales and service personnel close to our key customers and believe that, as the Group grows and offers more solutions, it has more potential to secure a larger share of the client's IT spend.

Product

In 2011 the Group launched and sold several new solutions to meet the requirements of its clients both today and in the future.

In today's environment, clients appear to be particularly focused on financing and counterparty risk. The launch of Brady Collateral Management addresses this need and is already in production.

In 2011 the Group also launched Brady Order Management System ("OMS"). As electronic trading grows exponentially, OMS provides a real-time web based platform allowing clients to send orders for physical or derivative commodities.

Increasingly, corporates and individuals are being offered flexible purchasing terms for their energy contracts. Brady Energy Sales Manager is a web-based solution that allows energy company clients to view historic and potential future power consumption and to forecast future energy costs based upon fixed, floating or capped price assumptions. This functionality can be seamlessly integrated into the energy companies' trading, risk and billing systems.

The Group has seen a growth in demand for Brady to host its software solutions on clients' behalf. As at 31 December 2011, Brady hosted nine clients and anticipates significant growth in this number going forward. In conjunction with the transition to a licence rental model, Brady sees this offering as a competitive advantage versus its competitors in securing new clients.

Technology

The Group continues to use Microsoft and Oracle technologies and has been using the very latest offerings, including Silverlight, web services, C#, .Net and Oracle 11g, with significant investment made in product development aimed at addressing identified market needs.

The Group expects to continue to invest to maintain its offering and to expand its use of Service Orientated Architecture (SOA). The Group's ability to leverage the enlarged team and particularly to re-use components across its solutions is central to Brady's strategy. In 2011 the Group delivered a number of SOA components including a market rates hub, an enterprise-wide view of Brady's commodities risk and an enterprise service bus for communication internally and externally.

Acquisitions

As referred to in the 2011 interim results statement, the Brady Energy acquisition was very quickly integrated within Brady and has consistently traded ahead of initial expectations. We continue to believe that the large and expanding energy markets for electricity, gas, emission certificates and coal are highly complementary to Brady's established commodity markets, offering growth due to the global expansion in carbon trading and renewable energy and significant cross-selling opportunities from the enlarged customer base.

This provided the context for the recent acquisition of Navita, completed on 8 March 2012 and funded by the placing of £18m in new shares, as well as the smaller bolt-on acquisition of syseca which completed on 10 February 2012. Both of these acquisitions will be integrated with our existing Brady Energy business. This integration process was planned prior to the completion dates and is now underway with pace. Although the integration process has only been underway for a matter of weeks, we have been impressed by the enthusiasm, support and goodwill from all the teams during this activity.

The Group remains active in seeking potential further opportunities to enhance its asset class coverage, product offering, geographical footprint and customer base through selective acquisitions. 

Strategy and Operations

The Group has continued to demonstrate that it can secure contracts with blue-chip customer names around the world. The European presence was further strengthened following the acquisition of Brady Energy, with the EMEA region generating 77% of total revenue in 2011. To complement this, the Group has built a team in North America to service local clients, with 10% of total revenue in 2011 coming from the Americas. The Group recently opened an office in Singapore which, following early sales success, is being expanded with local services staff. The APAC region generated 13% of total revenue in 2011.

The Group is optimistic that the rebound and growth in the Group's underlying markets will continue to be forced by powerful market drivers, including the industry focus on risk and governance, the European Electricity Grid Initiative ("EEGI") and on meeting increased regulatory requirements. These drivers are expected to create an attractive growth market opportunity for Brady. The Group now has a stronger cross-product offering and wider geographic reach in order to take advantage of this opportunity. We are encouraged by an advanced pipeline which, in monetary terms, has also increased during 2011 and further in early 2012. I look forward to reporting further new contract wins in the coming months.

At the end of 2011, the Group had approximately 150 employees around the world, substantially increasing domain expertise and the ability to execute globally. More than 50% of the Group's employees have a first language other than English, enabling strong client communication in local regions. The number of employees has subsequently increased to more than 200 employees in 2012.

Market

Brady operates in the metals, energy and soft commodities markets, with a particular expertise in delivering software solutions and associated services for physical and derivative trading, risk management, finance and logistics. These markets have continued to receive attention from investors worldwide partially because of the dramatic potential returns and price volatility. As well as this, key drivers behind demand for new systems include:

·; Focus on risk management, particularly market, counterparty, operational and liquidity risks. While regulations are taking longer to deploy than originally anticipated, given political sensitivities, Brady still expects to see profound changes in the way that many markets trade as regulators respond to the credit crisis with more centralised clearing and increased regulatory requirements, for example from the Dodd-Frank law, MIFID and Basel 3;

·; the dramatic increase in electronic trading;

·; the impact of EEGI, which is expected to increase cross-border energy trading, increase the proportion of energy generation from renewable sources, see the use of less carbon intensive energy sources and increase traction in smart metering. These are all expected to generate higher volumes and more complexities in energy trading in European energy markets; and

·; technology innovation, including the use of newer technologies, for example Smart Phones, tablets and apps, providing a stimulus to allow traders to more easily access their trade information whilst travelling and provide very user-friendly interfaces.

2011 appeared to be a better trading market for our clients compared with previous years. There are still concerns about the economic outlook for 2012 but overall powerful market drivers remain and I am confident that we are well positioned to continue delivering quality solutions around the globe.

Summary and Outlook

The Board is very pleased with the Group's progress in 2011 which, with 14 significant new licence contracts and 25 installations or upgrades, we believe continues to demonstrate the success of the Group's strategy. The commercial focus has delivered strong revenue and profitability growth. The Board believes that the Group is well placed to deliver further momentum in growth during 2012 and beyond.

2012 has already started very positively following the completion of two acquisitions and a well supported share placing. The Group expects to translate the growth in the pipeline into the signing of new business. The year is expected to be very busy as we will be working hard to complete the implementations currently underway, to secure new business and to complete the integration of the two newly acquired businesses into Brady Energy.

The Group announced in January 2012 its decision to undertake a phased transition from a traditional up-front term licence model to a rental model. Whilst economic conditions have been and remain challenging, the Group anticipates that this switch will improve its ability to forecast revenues with inherently lower licence revenue risk, as well as ultimately providing higher visibility and quality of earnings as well as offering the potential to generate higher lifetime revenues from individual client contracts. The Group's trading to date remains in line with the Board's expectations.

Gavin Lavelle

Chief Executive 

FINANCIAL REVIEW

I am pleased to provide a more detailed review of the financial highlights:

Group Trading Performance (before exceptional items)

Revenue for the year increased by 72% to £19.16 million (2010: £11.1 million). Taking into account acquisition growth, total revenues grew by 11% on a like-for-like basis. The revenue composition is summarised in the table below:

The increase in recurring revenues continues to be a primary focus which helps to underpin quality and visibility of earnings. Recurring revenues comprise annual maintenance fees generated from the Group's traditional up-front licence sales and, following the acquisition of Brady Energy, recurring licence rental fees. Recurring revenues grew by 147% to £9.8 million from £4.0 million as a consequence of the Group's larger installed customer base and the inclusion of Brady Energy's recurring licence rental fees. Significantly, recurring revenue comprised 51% of total revenues, a substantial increase from 36% in 2010.

Services and development revenues have increased 15% to £6.0 million from £5.1 million. This increase derived from the increased service work attached to a number of substantial contracts secured in 2010 and 2011 as well as upgrade and other work carried out for existing clients.

Finally, licence revenues increased by 72% to £3.4 million from £2.0 million. Whilst the Group recognises that both 2010 and 2011 have presented a tough environment to secure new licence business, the positive momentum in new deals secured during 2011 is encouraging.

The overall gross margin reduced to 51% from 55%. This is primarily a reflection of the change in business mix which saw a much higher proportion of recurring revenues, with modestly lower margin but better visibility and lower risk.

Selling and administrative expenses before exceptional items increased by 64% to £7.5 million from £4.6 million, largely as a result of the Brady Energy acquisition and continuing investment in the Group's routes to market and its delivery and product management. These expenses also include material increases in the amortisation of acquired intangible assets, which totalled £616,000 (2010: £193,000) and the amortisation of capitalised development, which totalled £314,000 (2010: £111,000).

EBITDA before exceptional transaction costs increased substantially in the year, by 78% to £3.7 million (2010: £2.1 million), modestly increasing the EBITDA margin to 19.3% from 18.7%.

Profit before exceptional items and tax increased 59% to £2.4 million (2010: £1.5 million).

Exceptional items

The exceptional items in the year of £326,000 related to the professional fees incurred during 2011 in relation to the acquisitions of Navita and syseca, which were both subsequently completed in early 2012. The exceptional item of £909,000 in 2010 related to the professional fees incurred in relation to the acquisitions of Brady Switzerland and Brady Energy which both completed in 2010.

Finance income

Interest income from the Group's cash resources was £68,000 (2010: £19,000), again remaining modest due to inherently low interest rates during the year.

Tax

The overall corporation tax charge for the year was £0.16 million (2010: £0.13 million), representing an effective tax rate on profits before exceptional items of 7% (2010: 8%). These rates take into account benefits from research and development tax credit claims already submitted.

Earnings and dividends

After including the exceptional acquisition transaction costs, profit before tax increased to £2.1 million (2010: £0.6 million) and profit after tax increased to £1.9 million (2010: £0.5 million).

The weighted average number of shares in issue increased to 54.2 million (2010: 29.1 million) almost entirely because of the £15 million share placing in December 2010. Basic earnings per share increased to 3.57 pence (or 4.17 pence before the exceptional items) from 1.69 pence (or 4.82 pence before the exceptional item) in 2010. The weighted average number of dilutive share options in issue increased to 1.8 million (2010: 1.3 million). Diluted earnings per share increased to 3.45 pence (or 4.04 pence after the exceptional items) from 1.62 pence per share in 2010 (or 4.61 pence after the exceptional item).

Adjusted earnings per share, as calculated by market analysts, adjusted to exclude share based payments, amortisation of acquired intangible assets, exceptional items and normalised tax, increased to 5.75 pence per share (2010: 5.68 pence per share), 15% above market consensus of 4.99 pence per share.

The Board is pleased to propose an increase in the dividend to 1.5 pence per share (2010: 1.4 pence per share). If this is approved by shareholders at the forthcoming Annual General Meeting, the dividend will be paid on 22 May 2012 to members whose names appear on the register at the close of business on 27 April 2012.

Share issues

During the year a number of share options under Brady plc's share option schemes were exercised. This increased Brady plc's ordinary shares issued and fully paid at the end of the year by 310,000 (2010: 293,750).

Treasury shares

During the year the Company utilised 276,944 of the Company's shares held in treasury in order to satisfy the granting of employee share options (2010: nil). The total number of ordinary shares held in treasury at the end of the year was 4,306 (2010: 281,250). No additional treasury shares were purchased in the year (2010: 281,250).

Balance sheet

The Group continues to retain a very strong balance sheet, dominated by cash and cash equivalents and free of debt.

Goodwill remained static at £9.2 million following the two acquisitions in 2010. The Board believes that the goodwill arising on these acquisitions is largely attributable to the incremental sales synergies that can be anticipated, associated with being part of the Group.

As required by IAS38 Intangible assets the Group capitalised £1.0 million (2010: £0.6 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. Net of amortisation to date, the book value of capitalised development costs amounted to £1.8 million at the end of 2011 (2010: £1.1 million).

Trade and other receivables increased to £3.9 million (2010: £3.5 million) largely as a result of the phasing in the year of certain large transactions, with immaterial provisions required. Trade and other payables reduced to £3.7 million from £5.0 million, largely as a result of the payment of £1.9 million of outstanding Brady Energy acquisition related costs that were accrued in 2010.

Cash flow

The Group enjoyed significantly improved positive operating cash flow, at £2.8 million (2010: £1.8 million), again running comfortably ahead of operating profitability.

The Group incurred investment outflows of £3.5 million of which £1.9 million related to payments in relation to the Brady Energy acquisition at the end of 2010, as noted below (2010: £9.9 million of which £9.0 million related to payments in relation to the two acquisitions in the year).

The Group incurred financial outflows of £0.6 million of which £0.8 million related to dividends payments (2010: £13.4 million inflow of which £14.3 million inflow related to proceeds of share issues and £0.4 million related to dividend payments).

At 31 December 2010 there remained liabilities in relation to fees associated with the acquisition of Brady Energy amounting to approximately £0.5 million, which were subsequently paid in 2011. There was also an agreed liability in relation to surplus working capital within Brady Energy, amounting to £1.4 million, which was paid in 2011. If these items were deducted from the £11.6 million of cash at 31 December 2010, the Group's net free cash at 31 December 2010 would have been £9.8 million. Net cash at the end of the year was £10.3 million (equivalent to 19 pence per share).

This balance continues to be maintained in excess of the Group's normal working capital requirements. The Board continues to believe that a strong balance sheet, dominated by cash and with no debt, is a key requirement for the Group's large global customers and potential customers looking to contract with Brady. It is also anticipated that part of the surplus cash resources may be used to finance smaller "bolt-on" future acquisition opportunities.

Risk

The principal credit risk faced by the Group relates to trade receivables, although this risk is partially mitigated by the fact that the Group's principal customers are large institutions. A significant proportion of the Group's revenues and expenses are denominated in pounds sterling, but this proportion decreased in 2011 following the acquisition of Brady Energy, with a greater proportion of revenues being billed in Norwegian Krone and Euros. The Group has partial natural hedges of payables to offset against receivables for US Dollars, Norwegian Krone, Swiss Francs and Euros. New treasury and foreign currency management procedures have been initiated during the year in order to manage the additional exchange exposure.

Post balance sheet events

As explained in more detail in the accompanying notes, the Company completed two acquisitions after the balance sheet date.

On 10 February 2012, the Company acquired syseca AG for a total consideration estimated to be £1.5 million, satisfied by £0.5 million in cash paid at completion, the issuance of 675,951 ordinary 1p shares at completion, an estimated £0.2 million of further consideration to be paid in cash in relation to surplus working capital balances to be paid following verification and to include £0.3 million of deferred consideration to be paid in cash in February 2013.

On 9 March 2012, the Company acquired Navita AS for a total consideration of £17.5 million, satisfied by £16.7 million in cash paid at completion, of which £4.2 million was paid in escrow, and the issuance of 918,762 ordinary 1p shares at completion.

In addition, on 8 March 2012, the Company raised £18.0 million gross following the placing of 23,299,772 ordinary 1p shares at a price of 77 pence per share, or £17.1 million net of fees.

Tony Ratcliffe

Finance Director

Selected explanatory notes:

1. Nature of operations and general information

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

The Group provides the leading trading and risk management software for global 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, which is also its principal place of business, is 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE.

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

2. Accounting policies and changes thereto

Basis of preparation

The financial information included in this report does not constitute statutory accounts for the purposes of section 434 of the Companies Act 2006. The comparative financial information contained in this statement has been extracted from the 2010 financial statements upon which the auditor's opinion is unqualified and does not include any statement under Section 498(2) or Section 498(3) of the Companies Act 2006. For further information, please refer to Brady plc's Consolidated Financial Statements 2010, which have been filed with the Registrar of Companies and are available on the Companies website, www.bradyplc.com

These condensed consolidated preliminary financial statements have been prepared in accordance with IFRS as adopted by the European Union and under the historical cost convention. The measurement bases and principal accounting policies for the Group are set out below:

Going concern

The Group has maintained its liquidity position and remains debt-free, despite significant expenditure on acquisitions over the past two years. The Group's forecasts and projections, taking into account reasonably possible changes in trading performance of the enlarged Group and the impact of post year end acquisitions and the share placing, show that the Group should be able to operate within the level of its current financing. After making enquiries, the Directors have a reasonably expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

Changes in 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 2010.

Basis of consolidation

The Group financial statements consolidate those of Brady plc and of its subsidiary undertakings at the statement of financial position date. Subsidiary undertakings are entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from the activities, which is considered to represent control. The Group obtains and exercises control through voting rights.

Profits or losses on intra-Group transactions are eliminated in full, unless intra-group losses indicate impairment in which case elimination may not be appropriate. Acquisitions of subsidiaries are dealt with by the acquisition method.

Business combinations

For business combinations since 1 January 2010, the requirements of IFRS 3 (Revised) have been applied.

On acquisition of a subsidiary, all of the subsidiary's assets and liabilities which exist at the date of acquisition are recorded at their fair values reflecting their condition at that date. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of consideration over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Identifiable assets are recognised regardless of whether they have been previously recognised in the acquired company's financial statements. Consideration is the fair values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control. Acquisition costs are expensed as incurred.

Prior to 1 January 2010, business combinations were accounted under the previous version of IFRS3 or under UK GAAP.

When Brady plc acquired Colplan Systems Limited in 2004, there was a share-for-share exchange. The UK GAAP merger relief criteria were met and so a merger reserve was recognised. The business combination was prior to the date of transition to IFRS being 1 January 2006.

Operating segments

In identifying its operating segments, management evaluates the nature of the Group's operations, which includes a number of products and services.

The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.

The Directors believe that the Group has one operation servicing a single market sector, the ECTRM market and therefore one segment. For this reason, there has been no additional disclosure under IFRS 8 Operating Segments in the financial statements, except for the entity-wide disclosures required.

Goodwill

Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable net assets acquired and is capitalised.

Goodwill is subject to annual impairment testing. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from the synergies of the related business combination and represent the lowest level within the Group at which management monitors the related cash flows. The recoverable amount is tested annually or when events or changes in circumstances indicate that it may be impaired. The recoverable amount is the higher of the fair value less costs and the value in use in the Group. An impairment loss is recognised to the extent that the carrying value exceeds the recoverable amount. In determining a value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the cash generating unit that have not already been included in the estimate of future cash flows. 

If the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, then the identifiable assets, liabilities, contingent liabilities and the cost of combination are re-assessed. Following the re-assessment, any profit or loss in excess of the carrying value is recognised immediately.

Goodwill previously written-off under UK GAAP prior to the adoption of IFRS for the restated statement of financial position of 1 January 2006 has not been reinstated. Goodwill previously written off to reserves is not written back to the statement of comprehensive income on subsequent disposal.

Revenue

Revenue comprises the value of sales (excluding trade discounts and VAT) of goods and services in the normal course of business. All revenue is measured at fair value of consideration. The Group has four sources of revenue and the policy on revenue recognition of each is as follows:

·; Licence revenues under the traditional up-front licence model are recognised on practical acceptance of the software, when all obligations have been substantially completed. This is when the customer has accepted the product, the risks and rewards of ownership have been transferred, it is probable that the economic benefits of the transaction will flow to the Group, all costs and revenue in relation to the transaction can reliably be measured and the Group has no further managerial involvement over the goods to the degree usually associated with ownership. To the extent that payments have been received in advance for licences, where practical acceptance has not yet been reached, these amounts are recognised as deferred income;

·; Licence revenues under the rental model are recognised over the period to which the rental fee relates but only after practical acceptance of the software, as defined above, has been received;

·; Consulting and professional service fee revenues, which are typically billed on a time and materials basis, are recognised as the work is performed provided that the amount of revenue can be measured reliably using timeheets or management estimates, it is probable that the economic benefits of the work performed will flow to the Group and the costs involved in providing the service can be measured reliably;

·; Support and maintenance and hosting revenue is recognised over the period to which it relates provided that the revenue can be measured reliably, it is probable that the economic benefits of the work performed will flow to the Group and the costs involved in fulfilling the maintenance or service can be measured and its is probable that the support and maintenance or hosting period will be completed; and

·; Where revenue arises from customer specific-software development, or where specific customisation or modification of the software is required, then revenue is recognised as the revenue and costs of the contract progresses, the stage of completion of the contract can be reliably measured and it is probable that the remaining obligations on the project will be satisfied and so economic benefits will flow to the Group. Full provision is made for losses on contracts in the period in which the loss is first foreseen.

Interest

Interest is recognised using the effective interest method, which calculates the amortised cost of a financial asset and allocates the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying value of the financial asset.

Dividends

Dividends are recognised when the shareholders' right to receive payment is established.

Research and development

Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred. 

Development costs incurred are capitalised only when all the following conditions are satisfied:

·; Completion of the intangible asset is technically feasible;

·; The Group intends to complete the intangible asset and use or sell it;

·; The Group has the ability to use the asset or sell it;

·; The intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

·; There are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

·; The expenditure attributable to the intangible asset during its development can be measured reliably.

The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare the intangible asset to be capable of operating in the manner intended by management. Directly attributable costs comprise employee salary and other employment costs incurred, on a time apportioned basis, on software development. The costs of internally generated software developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired licences. However, until completion of the development project, the assets are subject to annual impairment testing only. Amortisation commences upon completion of the asset, and is shown within selling and administrative expenses in the statement of comprehensive income. The amortisation period for development costs incurred in the Group is up to five years.

Amortisation of acquired intangible assets

Acquired intangible assets are stated at cost, net of amortisation and any provision for impairment. Amortisation is calculated to write off the cost of all intangible assets over the expected useful economic lives of typically ten years. Following any impairment, the amortisation is based on the revised carrying amount and, where applicable, the revised useful life.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment, if applicable. Depreciation is calculated to write off the depreciable amount (cost less residual value) of all property, plant and equipment by equal instalments over their expected useful economic lives. The rates generally applicable are:

·; Improvements to property 25% on cost

·; Computer equipment 33% on cost

·; Computer software 33% on cost

·; Fixtures, fittings and equipment 20% - 25% on cost

Material residual value estimates are updated as required, but at least annually. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation.

Taxation

Current tax is the tax currently payable based on taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the statement of financial position date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss, except where they relate to items that are charged or credited in other comprehensive income or directly to equity (such as share based payments) in which case the related deferred tax is also charged or credited in other comprehensive income or directly to equity.

Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size of incidence to enable a full understanding of the financial performance. Transactions which may give rise to exceptional items are principally acquisition transaction costs.

Financial assets

Financial assets are loans and receivables. All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are recognised at fair value plus transaction costs.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables are classified as loans and receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or loss.

Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate.

An assessment for impairment is undertaken at least at each reporting date.

Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of direct issue costs.

At each reporting date all financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in profit or loss. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to profit or loss on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

A financial liability is de-recognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

Foreign currencies

Transactions in foreign currencies are translated into the functional currency of the individual entity within the Group at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the statement of financial position date. All exchange differences are dealt with through profit or loss.

The assets and liabilities in the financial statements of foreign subsidiaries and associates and related goodwill are translated at the rate of exchange ruling at the statement of financial position date. Income and expenses are translated at the actual exchange rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries and associates are recognised in other comprehensive income and are accumulated in the foreign currency reserve in equity. On disposal of a foreign operation, the cumulative translation differences are transferred to the profit or loss as part of the gain or loss on disposal.

The Group has taken advantage of the exemption in IFRS 1 and has deemed cumulative translation differences for all foreign operations to be nil at the date of transition to IFRS. The gain or loss on disposal of these operations excludes translation differences that arose before the date of transition to IFRS.

Post employment benefits and short-term employee benefits

The Group provides post employment benefits through defined benefit plans as well as various defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The Group contributes to several schemes for individual employees that are defined contribution plans. Contributions to the plans are recognised as an expense in the period that relevant employee services are received.

Plans that do not meet the definition of a defined contribution plan are defined benefit plans. The legal obligation for any benefits remains with the Group, even if plan assets for funding the defined benefit plans have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. The liability recognised in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Any movement in the net of plan assets and plan liability is included within other comprehensive income.

Management estimates the DBO annually with the assistance of independent actuaries. The estimate of its post retirement benefit obligation is based on standard rates of inflation and mortality. It also takes into account the group's specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

All post employment benefits expenses are included in employee benefits expense.

Short-term employee benefits, including holiday entitlement are included in current pension and other employee obligations at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

Leased assets

All leases are regarded as operating leases as the risks and rewards of ownership are not transferred. Payments made under leases are charged to profit or loss on a straight-line basis over the lease term. Lease incentives are spread over the term of the lease.

Share options

All share-based payment arrangements granted that had not vested prior to 1 January 2006 are recognised in the financial statements. The Group operates a number of employee share schemes under which it makes equity-settled share-based payments to certain employees. None of the Group's plans feature any options for a cash settlement.

Where employees are rewarded using share-based payments, the fair values of employees' services are determined by reference to the fair value at the grant date of equity instruments issued by the Group. The fair value of these instruments (options) is determined using the binomial valuation model. The share-based payment is recognised as an expense in profit or loss, together with a corresponding credit to a share-based payment reserve in equity. This expense is incurred on a straight-line basis based on the Group's estimate of the number of shares that will vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded in the share premium account.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Equity

Equity comprises the following:

·; "Share capital" represents the nominal value of equity shares;

·; "Treasury shares" comprise own shares in Brady plc purchased and retained by the Company;

·; "Share premium account" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

·; "Merger reserve" represents the merger reserve set up in relation to the accounting for the acquisition of Colplan Systems Limited in 2004 that was present under UK GAAP and exempt from reclassification on transition to IFRS;

·; "Capital reserve" represents the capital reserve set up to account for shares redeemed or purchased wholly out of distributable profits that was present under UK GAAP and exempt from reclassification on transition to IFRS;

·; "Equity reserve" represents the reserve in relation to share options issued but not yet exercised;

·; "Foreign exchange reserve" represents the exchange difference on consolidation of investments in overseas subsidiaries; and

·; "Retained earnings" represents retained profits.

Treasury Shares

Equity shares in Brady plc held by the Company are classified as Treasury Shares. These shares are treated as a deduction from the issued and weighted average number of shares. The consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from Group equity until the shares are cancelled, reissued or disposed of. When such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders. Distributions received on treasury shares are eliminated on consolidation.

2. Sales revenuefluctuations

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. It is anticipated that this effect will be reduced over time as the Group transitions to a licence rental model.

3. Segment reporting

Although the Group has five main products, the Group has one principal activity and one operating segment, being the provision of software solutions to the global commodities trading and risk management market. The products aggregate to provide a full offering to broadly similar customers around the world. The KPIs used to manage the business apply to the segment as a whole. An analysis of sales revenue by geographical market is given below:

Countries where revenue represents more than 10% of Group revenues are detailed below:

Within this one activity, the Group generates revenue from software licence sales, recurring maintenance fees and the provision of associated consulting and development services. Revenues can be analysed as below:

Within this one activity, the Group had non-current assets (excluding goodwill) outside of the United Kingdom at the year-end date as follows:

This reconciles to total non-current assets (excluding goodwill) as follows:

The management of the Group does not analyse the net assets according to revenue type.

4. 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 year. 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 year, 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 exceptional items.

The calculation of the adjusted earnings per share, as calculated by external analysts, is based on the profit after tax, adjusted for acquired intangible assets amortisation, share based compensation, exceptional items and normalised tax. Under this basis, the adjusted earnings per share for 2011 increased to 5.75 pence per share (2010: 5.68 pence per share), which was 15% above the consensus of market forecasts of 4.99 pence per share.

The reconciliation of average number of ordinary shares used for basic and diluted earnings per share is as below:

All earnings per share calculations relate to continuing operations of the Group

5. Exceptional Items

6. Dividends

During the year Brady plc paid dividends of £759,000 to its equity shareholders (2010: £370,000). This represented a payment of 1.4 pence per share (2010: 1.3 pence per share).

7. 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:

Subsequent to the annual impairment tests, the carrying value of goodwill is allocated to the following cash-generating units:

Management have considered all cash generating units separately when determining appropriate assumptions. The recoverable amounts for the cash-generating units given above were determined based on value-in-use calculations, at a level where there are largely independent cash inflows. Management prepares detailed five year cash flow forecasts and determines a discount rate in order to calculate the present value of such cash flows, which represents the recoverable amount. The discount rate used in the calculation was 15%. The principal assumption used in the forecasts have been the growth rate in relation to new licence revenues at 7.5% or 10% per annum, being conservative in relation to recent performance, the continuance of existing maintenance revenue streams and current levels of resources required to support the business unit. Cash flows beyond the five year period covered by the financial forecasts are extrapolated using the same estimated growth rates. Any impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount and this impairment loss is used to reduce the carrying amount of any goodwill allocated to that cash-generating unit.

Key judgements and estimates are made in determining the value in use of the cash-generating units described above. The management of the Group is not currently aware of any probable changes that would necessitate changes in its key estimates.

8. Other intangible assets

Other intangible assets comprise the following:

The net carrying amount can be analysed as follows:

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

Subsequent to the annual impairment tests, the carrying value of Group intangible assets is allocated to the following cash-generating units:

The recoverable amounts for all of the cash-generating units given above were determined based on value-in-use calculations, at a level where there are largely independent cash inflows. The carrying value of the intangible fixed assets has been compared and justified by reference to the Group's forecasts for the five years following the reporting date. Any impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount and this impairment loss is used to reduce the carrying amount of any goodwill allocated to that cash-generating unit.

Key judgements and estimates are made in determining the value in use of the cash-generating unit described above. The management of the Group is not currently aware of any probable changes that would necessitate changes in its key estimates.

9. Share issues

The Company made various allotments of ordinary 1p shares during the year following the exercise of various share options. This increased the Company's ordinary shares issued and fully paid at the end of the year by 310,000 (2010: 293,750).

10. Treasury shares

During the year the Company utilised 276,944 of the Company's own treasury shares to satisfy the granting of employee share options (2010: nil). During the year the Company purchased none of the Company's own shares to retain in treasury (2010: 281,250). The total number of ordinary shares held in treasury at the end of the year was 4,306 (2010: 281,250).

11. Acquisitions

There were no acquisitions during 2011 but two acquisitions completed in 2010.

Viveo Switzerland SA (Brady Switzerland)

On 15 March 2010 the Group acquired the entire issued share capital of Viveo Switzerland SA (Brady Switzerland), a company incorporated in Switzerland. Brady Switzerland provides software for the risk management, trading and administration of soft commodities and has clients based in Europe.

Full details of the net assets and liabilities acquired and any fair value adjustments are fully detailed in the 2010 annual report and consolidated financial statements.

Viz Risk Management AS (Brady Energy)

On 23 December 2010 the Group acquired the entire issued share capital of Viz Risk Management AS (Brady Energy), a company incorporated in Norway. Brady Energy provides software for the risk management, trading and administration of energy and has clients based in Northern and mainland Europe.

Full details of the net assets and liabilities acquired and any fair value adjustments are fully detailed in the 2010 annual report and consolidated financial statements.

12. Post Balance Sheet Events

During 2012 to date, the Company has completed two acquisitions, completed a share placing and undertook a partial hive-down.

syseca AG ("syseca")

On 10 February 2012 the Group acquired the entire issued share capital of syseca, a company incorporated in Switzerland. syseca provides physical electricity trading capabilities and connectivity to most major European Transmission System Operators (TSO's).

The net assets and liabilities acquired are not yet finalised but initial estimates, which are subject to revision, are provided below:

The total consideration of £1,468,000 net of cash acquired of £705,000 was £763,000.

The fair value adjustment does not yet incorporate any adjustment in relation to any potential surplus or shortfall in pension liabilities under pension schemes which technically redefined as defined benefit pension plans under IFRS. In addition, following an initial review of the fair value of assets and liabilities acquired, in accordance with IFRS3 Business Combinations the Group has identified two intangible assets totalling £752,000, 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 initially valued at £192,000 and the software has been initially valued at £560,000.

Goodwill of £435,000 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 enlarged Brady Group and the ability to sell and cross sell with a larger combined sales force.

Transaction costs of £31,000 in related to this acquisition were expensed as exceptional transaction costs in 2011. Further transaction costs were incurred in 2012 and will be expensed in 2012.

Navita AS ("Navita")

On 9 March 2012 the Group acquired the entire issued share capital of Navita, a company incorporated in Norway. Navita is a leading provider of systems to the energy markets. Focusing on the physicals power and carbon emission trading. The total consideration was £17.5 million, satisfied by £16.7 million in cash paid at completion, of which £4.2 million was paid in escrow, and the issuance of 918,762 ordinary 1p shares at completion.

Given the timing of this completion date, no analysis of assets and liabilities has been prepared yet, nor have any fair value adjustments been considered.

Transaction costs of £295,000 in related to this acquisition were expensed as exceptional transaction costs in 2011. Further transaction costs were incurred in 2012 and will be expensed in 2012.

Share placing

On 8 March 2012, the Company raised £18.0 million gross following the placing of 23,299,772 ordinary 1p shares at a price of 77 pence per share, or £17.1 million net of fees.

Hive-down

On 1 January 2012 certain parts of the trade and associated assets of Brady plc were hived down to Brady Trading Limited, a wholly owned subsidiary of Brady plc.

13. Financial Statements

Copies of the 2011 annual report and consolidated financial statements will be posted to shareholders shortly and will be available from the Company's registered office at 281 Cambridge Science Park, Milton Road, Cambridge, CB4 0WE and on the Company's website www.bradyplc.com