April 2010

Brady PLC is one of the leading CTRM vendors in the metals and agricultural commodities space. It was founded 20-years ago by Robert Brady and its first client was the UK's Midland Bank, which requested some pricing algorithms for FX options. By 1998, Brady was selling a metals CTRM solution to clients like NM Rothschild and Standard Bank London and in 2004, it successfully listed on the AIM of the London Stock Exchange becoming one of the first of the very few CTRM vendors that are actually public companies. The listing was to raise capital to strengthen the balance sheet and it also ultimately resulted in the appointment of Gavin Lavelle in 2007 as the company's new CEO. Brady has also made the news with a number of acquisitions including its recent acquisition of Viveo Switzerland in March of this year. Today, the company has over 100 clients of its software, no debt and 6 million GBP in cash. I met with Mr. Lavelle recently in London to find out more about Brady and its products.

The new management team—which came in just over two years ago—sought initially to strengthen the company's sales and marketing and product marketing areas and they have been rewarded with good growth—the company is forecasting revenues for 2010 of 10.5million GBP. Its client base is global with around 50 percent in Europe, 35 percent in North America and 15 percent in Asia. Its list of clients is impressive including Alcan, Aleris, Koch Supply & Trading, Asarco, MAREX Financial, Mitsubishi Corporation, Novelis, Prysmian SpA, Lukoil Company, Cotton Distributors Inc, Donetsk, Rosbank, Louis Dreyfus Commodities Suisse SA, Sucden Financial, Standard Bank, Toyota Tsusho Metals, Trafigura and Xstrata Copper.

Products

Brady is very strong in the base and precious metals area led by its Trinity CTRM product. Trinity is a supply chain and risk management software solution that addresses all metals, energy and soft commodities as well as associated foreign exchange and money market requirements in a single, integrated platform. The Trinity platform was supplemented by the Aquarius platform in 2009 via its acquisition of Comsoft. Comsoft had a strong, impressive client base and around 25 years of knowledge and expertise in the raw materials business. Aquarius was originally developed in a live mining, trading and smelting organization and it provides a single solution for companies looking to manage their metal assets from raw materials at the mine through trading and smelting to refined finished products. The recent acquisition of Viveo Switzerland adds its product Fintrade, a CTRM solution for soft commodities, oil, gas and metals to the Brady product family. In our recent Vendor Perception study, Brady emerged as one of the perceived market leaders for base and precious metals.

Differentiators

According to Mr. Lavelle, Brady sees its key differentiators as being focused on the commodity trading segment with a particularly strong focus on the physical business and complex derivatives and risk management. A demonstration of the Trinity product served to back up his assertions. Today, Brady has, via both organic growth and acquisition, extended its platform coverage from base and precious metals into raw materials and agricultural commodities. It does not yet have an explicit energy offering but its products have capabilities to handle certain energy commodities and derivatives too. Brady is a Microsoft shop developing in C sharp on an Oracle/SQL database platform. It utilizes a service-oriented architecture and will offer its products on a hosted basis with around six of its clients favoring that delivery mechanism.

Summary

Brady PLC is one of the leading CTRM vendors outside of the energy space traditionally serving the metals commodities industry and now extending its reach into raw materials and agricultural commodities. It is, as stated above, also one of the very few public companies offering CTRM software which makes its operations and finances very much more transparent. Its positive balance sheet and client list suggests that the company is doing very well and is pursuing a quite aggressive acquisition strategy but one that makes a good deal of sense in terms of developing a consistent and coherent position in the marketplace.

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