TIDMBLTG
RNS Number : 1774P
Blancco Technology Group PLC
16 February 2021
16 February 2021
Blancco Technology Group plc
Interim results for the six months ended 31 December 2020
Continued momentum driven by underlying structural growth with
strong progress anticipated in second half
Blancco Technology Group plc (AIM: BLTG, "Blancco", the
"Company" or the "Group"), the industry standard in data erasure
and mobile device diagnostics, is pleased to announce its unaudited
interim results for the six months ended 31 December 2020 .
FINANCIAL AND OPERATIONAL HIGHLIGHTS
GBPm unless otherwise stated H1 FY21 H1 FY20 Change
Revenue 17.4 17.4 0%
-------- -------- -------
Gross Profit 16.2 16.5 (2%)
-------- -------- -------
Adjusted EBITDA* 5.3 4.4 20%
-------- -------- -------
Adjusted Operating Profit* 2.9 2.5 16%
-------- -------- -------
Operating Profit 0.7 0.7 (4%)
-------- -------- -------
Profit before taxation 0.5 0.7 (21%)
-------- -------- -------
Adjusted Operating Cash Flow** 5.4 2.4 130%
-------- -------- -------
Cash generated from continuing
operations 5.0 1.6 215%
-------- -------- -------
Diluted Earnings per share 1.08p 1.40p (23%)
-------- -------- -------
Net Cash 8.2 5.4
-------- -------- -------
-- Despite challenging conditions resulting from the pandemic,
revenue was stable at GBP17.4m (constant exchange rates ('CER')
+1%):
o Enterprise revenue increased by 6% (CER +7%) to GBP6.4 million
(H1 FY 2020: GBP6.0 million)
o Mobile revenue in line with prior period (CER +2%) at GBP5.8
million (H1 FY 2020: GBP5.8 million)
o IT Asset Disposition ("ITAD") revenue decreased by 7% (CER
-7%) to GBP5.2 million (H1 FY 2020: GBP5.6 million)
o The second quarter of FY21 was Blancco's highest revenue
generating quarter in its history
-- Net cash balance of GBP8.2m (31 December 2019: GBP5.4m)
-- Adjusted Operating Cash Flow at 102% (H1 FY 2020: 53%) of
Adjusted EBITDA following strong cash generation in the period
-- Strong growth in APAC which appears to be further progressed
in its COVID-19 pandemic recovery:
o APAC revenue increased by 27% (CER +28%) to GBP6.2 million (H1
FY 2020: GBP4.8 million)
o EMEA revenue decreased by 5% (CER -7%) to GBP6.3 million (H1
FY 2020: GBP6.7 million)
o North America revenue decreased by 17% (CER -14%) to GBP4.9
million (H1 FY 2020: GBP5.9 million)
OPERATIONAL HIGHLIGHTS
-- Continued expansion of our network of blue-chip channel partnerships in Enterprise;
o Channel revenue now represents 47% of Enterprise revenue (H1
FY 2020: 40%)
o Master Services Agreement signed with major Global Systems
Integrator
o Agreement with Deloitte extends beyond India into broader
Asian region
o Signed agreement with US government IT solutions provider,
Carahsoft Technology Group ("Carahsoft"), to provide solutions
through AWS Marketplace
-- Significant increase in volume of mobile handsets being
handled by mobile customers despite pandemic disruption to retail,
signalling that the second hand mobile market is developing
rapidly, globally
-- Established partnership with new global insurer on mobile handset insurance program
CURRENT TRADING AND OUTLOOK
-- Pipeline and early Q3 sales activity leads to confidence over
strong growth anticipated in second half of the year
-- Data security and ESG considerations expected to drive growth
in ITAD and Enterprise segments as trading conditions normalise
post COVID-19
-- Blancco well positioned to move into next phase of growth as
it capitalises on strong structural tailwinds and sector-leading
data sanitisation and diagnostic technologies
-- Revenue and profit growth is continuing in line with the Board's expectations
*Adjusted profit measures are stated after excluding expenses
relating to share option schemes, exceptional costs & incomes
and the amortisation of acquired intangible assets
** Adjusted operating cash flow is operating cash flow excluding
taxation, interest payments & receipts and exceptional
payments
Matt Jones, Chief Executive said:
"We are pleased with the results generated during the first half
of our financial year, achieved during a period when we have had to
replace GBP1.4m of revenue from a large mobile carrier contract in
the first half of the previous year which ended with effect from 31
December 2019 whilst also contending with the trading conditions of
the COVID-19 pandemic which also were not present in the comparator
period.
"We believe that the results generated in the APAC region, where
the management of the pandemic has been much less disruptive to
business, gives us an indication of the growth potential in the
business as a whole, once normal trading conditions resume.
"Whilst there is ongoing uncertainty arising from COVID-19, we
are optimistic that Blancco is well placed to prosper as global
trading conditions return to normality. Even during this most
challenging period, we have continued to grow profit as well as
generate significant amounts of cash. The Board is confident that
Blancco is positioned to deliver sustained levels of growth going
forwards in line with our expectations."
S
For further information:
Blancco Technology Group plc Via Buchanan
Matt Jones, Chief Executive Officer
Adam Moloney, Chief Financial Officer
Peel Hunt (Nominated Advisor & Joint Broker)
+44 (0) 20 7418
Edward Knight / Paul Gillam / Nick Prowting 8900
+44 (0) 20 7597
Investec Bank plc (Joint Broker) 5970
Patrick Robb / Sara Hale / Virginia Bull
+44 (0) 20 7466
Buchanan Communications Limited 5000
Chris Lane / Stephanie Watson / Charlotte
Slater
blancco@buchanan.uk.com
Presentation and webcast:
A virtual results briefing for analysts will be held today, 16
February 2021 at 3.00pm, via a live webcast and conference call
facility.
If you would like to join the conference call, please contact
Buchanan at blancco@buchanan.uk.com .
CHIEF EXECUTIVE'S REPORT
Business overview
I am pleased to report on a period of strong trading where the
Company has continued to prosper despite the challenging trading
conditions created by the COVID-19 pandemic. The fundamental growth
drivers in the business have continued to gain momentum through the
period;
-- Sustainability - the alternative to using data sanitisation
software on IT assets is the physical destruction of those assets
which will ultimately end up in landfill sites and cause harm to
the environment. Pressures on companies to reduce their negative
environmental impact continue to mount while awareness of the use
of data sanitisation software continues to increase. These themes
are also now moving up the agenda for governments across the globe.
Increasing consumer awareness regarding sustainability, alongside
financial benefits, is also driving growth and sophistication in
the second hand mobile phone market where Blancco's diagnostics
technology is industry-leading.
-- Governance - data security has become increasingly important
over the past year as more employees have completed their work
outside of the office environment, bringing many challenges for IT
teams. The disposition of assets held outside of the company
offices will be difficult to manage through the physical
destruction of assets, leading to opportunity for Blancco's suite
of data erasure solutions.
With limited competition in the markets that it addresses, we
are confident that Blancco is well placed for near-term and
sustainable growth.
Enterprise
Although the immediate impact of the pandemic has been to
lengthen sales cycles, Enterprise revenue still grew in the period
by 6% to GBP6.4m (H1 FY 2020: GBP6.0m). Understandably, the focus
for many of our customers who tend to be the IT departments of very
large organisations has been around managing large workforces as
they have switched to working from home, rather than in an office
environment. In many instances this has led to the purchase of IT
equipment in bulk to facilitate a remote workforce while a large
amount of IT equipment has remained redundant in the workplace. It
is anticipated that some level of remote working will be a
permanent feature for most office-based workers. Blancco has the
suite of solutions that will enable IT departments to manage the
excess redundant equipment in a data secure, environmentally
friendly manner. Our solutions also allow businesses to manage IT
assets remotely which becomes important when IT assets need to be
returned to a company because they are being replaced or because
the employee is leaving the company.
Blancco has continued to see significant interest in its ability
to remotely erase data from IT assets. An example use case is where
a departing employee needs to return their laptop but will want to
make sure that no data resides on the asset before it is shipped
from the employee's home.
It is anticipated that much of the future growth in this segment
will continue to come from channel partners who are likely to have
deeper access to large blue chip organisations than Blancco will be
able to obtain directly. In the period, revenue from channel
partners represented 47% of total Enterprise revenue (H1 FY 2020:
40%). The bulk of this increase has come from Blancco's traditional
channel partners while new relationships, such as those announced
over the past year, with the likes of Amazon Web Services and
Deloitte India, are at the early stages of revenue generation. We
continue to look to broaden this network of channel partners and
have recently formalised new agreements with a global systems
integrator and extended our relationship with Deloitte into the
broader APAC region. In addition, we have signed an agreement to
extend our relationship with Trusted Government IT Solutions
Provider, Carahsoft, to offer solutions through the AWS
Marketplace. This agreement gives AWS Consulting Partner Private
Offers (CPPO) partners and enterprise decision makers the ability
to quickly obtain Blancco's data erasure software. The vastly
simplified procurement process streamlines billing to include
"pay-as-you-go" and subscription options, allowing government
agencies to build holistic data management solutions.
Governments are putting companies under increasing pressure to
improve their environmental footprint. In the UK, the House of
Commons Environmental Audit Committee published a report on
Electronic Waste ("e-waste") and the Circular Economy in November
2020. The report stated that the UK was the second largest producer
of e-waste in the world with over 1.5 million tonnes produced in
2019. The report estimated that 40% of the e-waste generated in the
UK was exported to overseas landfills where toxic chemicals are
often released. The report is encouraging the government to promote
the recycling of electronic waste but many companies are concerned
about recycling assets which currently store sensitive data. It
remains the case that the physical destruction of these assets is
still the most common way of managing this issue. Blancco's
solutions, which permanently and in an auditable manner erase data
from IT assets, enable organisations to recycle, resell or reuse
these assets with certainty that the data cannot be compromised.
The solution is usually more cost effective than the physical
destruction of assets meaning that there should be no obstacles to
this more sustainable method of managing assets.
The UK represents a relatively small proportion of Blancco's
revenue (<10%), but demonstrates the global opportunity that is
available to it as these sustainability initiatives are more widely
adopted. In France, the Commission Nationale de l'informatique et
des libertes (CNIL), which is the equivalent of the Information
Commissioner in the UK, published guidance in December 2020 which
recommends that professional organisations use Blancco for data
sanitisation. In Japan, following a breach of government data as a
result of the incorrect disposition of IT assets, policy has been
implemented which requires on-site data sanitisation of all
government assets which are being disposed. We continue to work
with other global governmental organisations to encourage data
sanitisation as best practice.
Mobile
Revenue in the Mobile segment was in line with the prior period
at GBP5.8m (H1 FY 2020: GBP5.8m). This progress in the segment is
very encouraging given that the comparator period includes the
revenues from a major contract with a mobile retailer that expired
in December 2019. The underlying revenue growth excluding that
contract was 32%.
Customer concentration in the business is generally very low
with no other customers representing more than 4% of Group revenue
in the previous financial year. This customer was a mobile handset
and airtime retailer that made the decision to run mobile handset
diagnostics at a logistics centre from 1 January 2020 rather than
in its own store network. This customer represented GBP1.4m of
revenue in the first half of the prior year and whilst the customer
continues to work with Blancco, it generates a significantly
reduced amount of revenue from the new contractual terms. Excluding
the impact of this one customer, revenue growth in mobile would
have been 32%, despite the disruption in retail caused by the
pandemic. This underlying growth has arisen as anticipated by
research published in recent years forecasting that the market for
resold handsets was anticipated to grow by 14% per annum until 2023
(Source: IDC). The latest generation of mobile handsets are more
expensive than ever but with trade in deals for old handsets which
are significantly more attractive than seen in the past. Whilst
there is the attraction of purchasing a new 5G handset in Europe
and North America, the 5G infrastructure has yet to reach many
parts of the rest of the world meaning that acquiring an older
handset at a much lower price is a more attractive prospect.
Blancco's solutions ensure that full diagnostic tests are run on
handsets to ensure they are fully operational before they are
resold while also ensuring that any data residing on the unit from
a previous user is irretrievably erased from the device.
We are also seeing increased demand from customers for our
mobile handset insurance solution. This solution allows retailers
to offer their customers the capability to run tests on their
devices without the need to visit a store as well as the ability to
offer customers a trade-in value for their handset in the event
that they wish to upgrade it. For insurers, the attraction of this
solution is the ability to detect damage on a phone that is present
on a device prior to insurance being taken out, leading to a
reduction in fraudulent claims. We announced in the summer of 2020
that a Master Services Agreement had been secured with leading
global professional services firm, Aon, to use this capability. We
can now also announce a further Master Services Agreement with
another global insurer to provide the same solution, initially in
the Middle East. The revenue model is such that Blancco will
receive a share of the insurance premium being received by the
retailer when insurance is taken out. As a result, revenues from
this solution will increase gradually over time as the insurance
platform is sold to retailers / carriers and then taken up by their
customers.
IT Asset Disposition ("ITAD")
Growth in the ITAD segment has been the most impacted by the
disruption caused by the pandemic. Whilst ITAD customers will
eventually benefit from the environmental and data security
tailwinds that are prevalent in the Enterprise segment, they are
also dependent on being able to access company premises to erase
and remove IT assets. Many companies are not allowing third parties
on their sites which has slowed the rate of license consumption by
our ITAD customers and resulted in revenues within the segment
decreasing by 7% to GBP5.2m (H1 FY 2020: GBP5.6m).
However, these ITAD customers are also seeing a significant
increase in the market for second hand IT equipment to help
companies manage a newly remote workforce at a time when sourcing
new IT equipment has been more difficult. Our ITAD customers are
expecting a sharp uplift in activity once they are able to access
the premises of their customers again and will need to manage the
excess IT inventory that is undoubtedly present in offices at the
moment.
Summary and Outlook
Despite the challenges presented by the global pandemic, in
particular the lengthening of sales cycles and disruption to
business, particularly in western regions, the underlying strengths
of the business have enabled revenues to remain stable at GBP17.4m,
whilst profit has increased significantly and the net cash balance
over the 2020 calendar year has increased from GBP5.4m to GBP8.2m.
Whilst revenue was stable year-on-year, this should be considered
in the light of the termination of our largest customer contract
(GBP1.4m in H1 FY 2020, c.4% of group revenue in FY20) with effect
from 31 December 2019, with the shortfall completely recovered
during the period.
We look forward to the second half of the financial year with
great confidence. The second quarter of FY21 was the highest
revenue generating quarter in the history of the company. Whilst
the pandemic continues to be disruptive, recent trading has
indicated that companies are getting back to work and order levels
are increasing. The momentum in sales activity and pipeline
currently being experienced gives us great confidence that strong
growth will be reported in the second half of the financial
year.
An increasingly remote workforce is likely to be a permanent
feature in the future presenting challenges for IT teams in how
they keep employee data secure. Along with the pressures for
companies to improve the environmental impact of their operations,
we also anticipate that there will be a release of pent-up demand
arising from the large increase in IT hardware that was acquired in
2020, increasing demand for our solutions.
We have already seen a large increase in demand for our mobile
handset solutions to support the growth in the resold handset
market that we have seen in recent months despite the disruption in
retail in general. We expect this to continue in the second half of
the current financial year.
Whilst the challenges of the pandemic are undoubtedly ongoing,
Blancco is very well placed to prosper as the global economy seeks
to return to normal trading conditions. The Company has performed
with great resilience through an extremely challenging period and
looks forward to 2021 with confidence and optimism.
Matt Jones
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
Revenue
In our Outlook statement accompanying the financial results for
the year ending 30 June 2020, we indicated that revenue growth in
the first half of the financial year would be disrupted by the
challenges brought by the pandemic which weren't a feature in the
comparator period. In addition, a large contract with a mobile
retailer that ended on 31 December 2019 contributed GBP1.4m of
revenue in the comparator period and needed to be replaced before
growth could be shown. It demonstrates the positive momentum in the
business that revenue remained stable at GBP17.4m in the
period.
This positive momentum in the business can be best demonstrated
in APAC where the impacts of the pandemic appear to have been least
disruptive to business. We saw revenue growth in the previous year
of 28% and this has been followed by a six month period during
which growth has been 27%.
Six months Six months Growth Year
Ended Ended rate ended
30
31 December 31 December June
2020 2019 2020
========================
Revenue (GBP millions) 17.4 17.4 0% 33.4
======================== ============ ============ ======= =======
Revenue by Geography
======================== ============ ============ ======= =======
North America 4.9 5.9 (17%) 10.1
Europe 6.3 6.7 (5%) 12.5
Asia and ROW 6.2 4.8 27% 10.8
======================== ============ ============ ======= =======
Revenue by Market
type
======================== ============ ============ ======= =======
Enterprise 6.4 6.0 6% 11.7
ITAD 5.2 5.6 (7%) 10.9
Mobile 5.8 5.8 0% 10.8
======================== ============ ============ ======= =======
The table above demonstrates the difference in trading between
APAC and the West where the pandemic has been considerably more
disruptive to trading. The revenue reduction in North America is
distorted by the mobile carrier contract referred to earlier which
contributed revenue of GBP1.4m in the comparator period. Excluding
that contract, revenue growth would have been modest in North
America while growth in the Mobile segment would have been
significant demonstrating the growth in the used mobile handset
market that has been experienced in recent months.
In the second half of FY20 we saw revenue of GBP16.0m compared
to GBP17.4m in the first half of the year. This revenue reduction
resulted from the early disruptive months of the pandemic. We
remain confident that the second half of the current financial year
will see significant growth as the revenue from the mobile carrier
contract has now been completely removed from prior year
comparatives and the disruption caused by the pandemic continues to
ease, particularly in Europe and North America.
Profitability Measures
Adjusted Operating Profit for the period has increased by 16% to
GBP2.9m (H1 FY2020: GBP2.5m). Operating profit for the period was
GBP0.7m (H1 FY2020: GBP0.7m). Whilst revenue in the business hasn't
grown, we have taken measures to protect the profitability of the
business during the turbulence of 2020. These measures included
freezing new recruitment and pay reviews. In addition, the
international nature of the business ordinarily results in
significant travel costs being incurred which hasn't taken place
during the first half of this new financial year. These measures
resulted in a 5% reduction in the cost base and led to the
increased profitability in the group. Adjusted operating margins in
the first six months of the year grew from 12% in the prior year to
17% in first half of the new financial year as a result of these
cost base protection measures. It is likely that we will see some
cost increases once normal trading conditions resume but this will
be accompanied by strong levels of revenue growth.
6 months 6 months
ended 31 ended 31
December December
2020 2019
(unaudited) (unaudited)
GBP'000 GBP'000
===================================== ==== ==== ============== ==============
Operating profit 716 743
------------------------------------------------- -------------- --------------
Acquisition costs - 503
Exceptional income (41) (875)
Amortisation of acquired intangible
assets 1,460 1,474
Share-based payments charge 767 646
------------------------------------------------- -------------- --------------
Administrative expenses adjustment (13,253) (13,975)
------------------------------------------------- -------------- --------------
Adjusted operating profit 2,902 2,491
------------------------------------------------- -------------- --------------
Adjusted EBITDA for the period grew by 20% to GBP5.3m (H1 FY
2020: GBP4.4m), giving an adjusted EBITDA margin of 30% (H1 FY
2020: 25%).
Balance Sheet
The Group continues to generate good levels of cash from
operations and ended the period with net cash of GBP8.2m (30
December 2019: GBP5.4m). Adjusted Operating Cash flow for the
period was GBP5.4m (H1 FY 2020: GBP2.4m), representing 102% of
EBITDA (H1 FY 2020: 53%). The cash generation was boosted by strong
revenue generating months in the early months of the second quarter
enabling cash from these sales to be collected before the end of
December. This is demonstrated in the reduced trade debtor balance
of GBP6.0m (31 December 2019: GBP7.3m) despite similar levels of
revenue in the comparative periods.
Adam Moloney
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2020
6 months 6 months Year ended
ended ended
30 June
2020
31 December 31 December (audited)
2020 2019
(unaudited) (unaudited)
Note GBP'000 GBP'000 GBP'000
===================================== === ===== ============== ============== ===========
Revenue 17,417 17,388 33,382
Cost of sales (1,262) (922) (1,761)
========================================== ===== ============== ============== ===========
Gross profit 16,155 16,466 31,621
Administrative expenses and
depreciation (15,439) (15,723) (31,652)
========================================== ===== ============== ============== ===========
Operating profit 716 743 (31)
------------------------------------------ ----- -------------- -------------- -----------
Acquisition costs 4 - 503 575
Exceptional income 4 (41) (875) (875)
Amortisation of acquired intangible
assets 1,460 1,474 2,921
Share-based payments charge 767 646 1,447
------------------------------------------ ----- -------------- -------------- -----------
Adjusted administrative expenses (13,253) (13,975) (27,584)
------------------------------------------ ----- -------------- -------------- -----------
Adjusted operating profit 2,902 2,491 4,037
------------------------------------------ ----- -------------- -------------- -----------
Finance income 51 1 3
Finance costs (242) (76) (151)
========================================== ===== ============== ============== ===========
Profit/(loss) before tax 525 668 (179)
Taxation 191 (30) 169
Profit/(loss) for the period 716 638 (10)
========================================== ===== ============== ============== ===========
Discontinued operations
Post tax results from discontinued
operations 5 114 378 1,126
========================================== ===== ============== ============== ===========
Profit for the period 830 1,016 1,116
========================================== ===== ============== ============== ===========
Attributable to:
Equity holders of the company 822 1,037 1,153
Non-controlling interests 8 (21) (37)
========================================== ===== ============== ============== ===========
Profit for the period 830 1,016 1,116
========================================== ===== ============== ============== ===========
Consolidated Statement
of Comprehensive Income
for the six months ended
31 December 2020
6 months 6 months Year
ended ended ended
30 June
31 December 31 December
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
=================================== ==== ============= ============= ===========
Profit for the period 830 1,016 1,116
Other comprehensive (loss)/income
- amounts that may be
reclassified to profit
or loss in the future:
Exchange differences arising
on translation of foreign
entities (2,718) (3,784) 1,330
========================================= ============= ============= ===========
Total comprehensive (loss)/income
for the period (1,888) (2,768) 2,446
========================================= ============= ============= ===========
Attributable to:
Equity holders of the
Company (1,856) (2,680) 2,491
Non-controlling interests (32) (88) (45)
========================================= ============= ============= ===========
Total comprehensive (loss)/income
for the period (1,888) (2,768) 2,446
========================================= ============= ============= ===========
Earnings per share
Continuing Operations:
Basic 2 0.96 p 0.92 p 0.04 p
Diluted 2 0.93 p 0.89 p 0.04 p
Discontinued Operations:
Basic 2 0.15 p 0.53 p 1.56 p
Diluted 2 0.15 p 0.51 p 1.50 p
Total Group:
Basic 2 1.11 p 1.45 p 1.60 p
Diluted 2 1.08 p 1.40 p 1.54 p
Condensed Consolidated Balance
Sheet
as at 31 December 2020
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
================================== ==== ============= ============= ===========
Assets
Non-current assets
Goodwill 50,101 48,667 51,881
Other intangible assets 21,423 21,616 22,798
Property, plant and equipment 2,366 1,960 1,765
Deferred tax assets 1,008 428 433
74,898 72,671 76,877
======================================= ============= ============= ===========
Current assets
Inventory 73 84 102
Trade and other receivables 6,251 7,265 7,254
Current tax asset 439 189 603
Cash 8,241 5,394 6,719
15,004 12,932 14,678
======================================= ============= ============= ===========
Total assets 89,902 85,603 91,555
======================================== ============= ============= ===========
Current liabilities
Trade and other payables (7,868) (8,217) (8,813)
Contingent consideration (319) (269) (288)
Current tax liability (288) (312) (269)
Provisions (166) (507) (227)
(8,641) (9,305) (9,597)
Non-current liabilities
Other payables (1,258) (1,359) (987)
Deferred tax (3,572) (3,325) (3,516)
Provisions (52) (218) (105)
======================================== ============= ============= ===========
(4,882) (4,902) (4,608)
======================================= ============= ============= ===========
Total liabilities (13,523) (14,207) (14,205)
======================================== ============= ============= ===========
Net assets 76,379 71,396 77,350
======================================== ============= ============= ===========
Equity
Called up share capital 1,512 1,507 1,507
Share premium account 21,103 21,103 21,103
Merger reserve 5,861 5,861 5,861
Capital redemption reserve 417 417 417
Translation reserve 3,258 880 5,936
Retained earnings 43,595 41,006 41,861
=================================== ======= ======= =======
Total equity attributable to
equity holders of the Company 75,746 70,774 76,685
Non-Controlling interest reserve 633 622 665
=================================== ======= ======= =======
Total equity 76,379 71,396 77,350
=================================== ======= ======= =======
Condensed Consolidated Statement
of Changes in Equity
for the six months ended 31
December 2020
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
====================================== === ============= ============= ===========
Balance at the start of the
period 77,350 62,204 62,204
Total comprehensive (loss)/income
for the period (1,888) (2,768) 2,446
Acquisition of non-controlling
interest without a change in
control - (1,370) (1,370)
Issue of shares - 12,736 12,736
Share based payment charge inclusive
of deferred tax 917 594 1,334
=========================================== ============= ============= ===========
Balance at the end of the period 76,379 71,396 77,350
=========================================== ============= ============= ===========
Consolidated Cash Flow Statement
for the six months ended 31 December
2020
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
=========================================== ============ ============ ============
Profit for the period 830 1,016 1.116
============================================ ============ ============ ============
Adjustments for:
Results of discontinued operations (114) (378) (1,126)
Net finance charges 191 75 148
Tax (income)/expense (191) 30 (169)
Profit on disposal of property,
plant and equipment (5) (2) (1)
Depreciation on property, plant
and equipment 577 526 1,100
Amortisation of intangible assets 1,829 1,396 2,991
Amortisation of acquired intangible
assets 1,460 1,474 2,921
Share-based payments expense 767 646 1,447
============================================ ============ ============ ============
Operating cash flow before movement
in working capital 5,344 4,783 8,427
-------------------------------------------- ------------ ------------ ------------
Acquisition costs - 503 575
Exceptional income (41) (875) (875)
-------------------------------------------- ------------ ------------ ------------
Adjusted EBITDA 5,303 4,411 8,127
-------------------------------------------- ------------ ------------ ------------
Decrease/(increase) in inventories 21 5 (8)
Decrease in receivables 642 130 417
Decrease in payables and accruals (1,011) (3,333) (2,373)
Cash generated from continuing operations 4,996 1,585 6,463
Acquisition costs payments 252 767 830
Share-based payments 155 - -
Adjusted operating cash flow 5,403 2,352 7,293
------------ ------------
Interest received 51 1 3
Interest paid (80) (70) (146)
Tax received/(paid) 250 (286) (613)
============================================ ============ ============ ============
Net cash generated from operating
activities - continuing operations 5,217 1,230 5,707
Net cash used in operating activities
- discontinued operations - (15) (15)
============================================ ============ ============ ============
Net cash generated from operating
activities - continuing and discontinued
operations 5,217 1,215 5,692
============================================ ============ ============ ============
Cash flows from investing activities
Purchase of property, plant and
equipment (126) (248) (401)
Purchase and development of intangible
assets (2,600) (2,183) (4,722)
Acquisition of subsidiaries, net
of cash acquired - (2,432) (2,721)
Net cash used in investing activities
- continuing operations (2,726) (4,863) (7,844)
Net cash generated from investing - - -
activities - discontinued operations
=========================================== ============ ============ ============
Net cash used in investing activities
- continuing and discontinued operations (2,726) (4,863) (7,844)
============================================ ============ ============ ============
Cash flows from financing activities
Payment of the principal portion
of lease liabilities (554) (421) (820)
Payments made to acquire non-controlling
interest - (28) (28)
Repayment of borrowings - (6,500) (6,500)
Share placing, net of fees - 9,577 9,577
Net cash (used in)/generated from
financing activities (554) 2,628 2,229
Net cash (used in)/generated from
financing activities - continuing
and discontinued operations (554) 2,628 2,229
Net increase/(decrease) in cash
and cash equivalents 1,937 (1,020) 77
Other non-cash movements - exchange
rate changes (415) (222) 6
Cash and cash equivalents at the
beginning of period 6,719 6,636 6,636
============================================ ============ ============ ============
Cash and cash equivalents at end
of period 8,241 5,394 6,719
Net cash 8,241 5,394 6,719
============================================ ============ ============ ============
Notes to the Half Year Report
For the six months ended 31 December 2020
1. Basis of Preparation
These half yearly results have been prepared on the basis of the
accounting policies to be adopted for the year ended 30 June 2021.
These are in accordance with the Group's accounting policies as set
out in the latest audited annual financial statements for the year
ended 30 June 2020.
All International Financial Reporting Standards ('IFRS'),
International Accounting Standards ('IAS') and interpretations
currently endorsed by the International Accounting Standards Board
('IASB') and its committees, in conformity with the requirements of
the Companies Act 2006 and as required to be adopted by AIM listed
companies, have been applied. AIM listed companies are not required
to comply with IAS 34 'Interim Financial Reporting' and accordingly
the Company has taken advantage of this exemption.
The financial information in these half yearly results does not
constitute statutory accounts for the six months ended 31 December
2020 and should be read in conjunction with the Group's annual
financial statements for the year ended 30 June 2020.
The condensed consolidated half yearly financial statements for
the six months to 31 December 2020 have not been audited or
reviewed by auditors pursuant to the Auditing Practices Board
guidance on Review of Half yearly Financial Information.
These unaudited half yearly results were approved by the Board
of Directors on 15 February 2021.
2. Earnings per share (EPS)
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
Pence Pence Pence
========================================= ============ ============ ===========
Continuing operations
Basic earnings per share 0.96 p 0.92 p 0.04 p
Diluted earnings per share 0.93 p 0.89 p 0.04 p
Adjusted earnings per share 3.44 p 3.02 p 4.70 p
Diluted adjusted earnings per
share 3.34 p 2.93 p 4.52 p
========================================= ============ ============ ===========
Discontinued operations
Basic earnings per share 0.15 p 0.53 p 1.56 p
Diluted earnings per share 0.15 p 0.51 p 1.50 p
Adjusted earnings per share 0.15 p 0.53 p 1.56 p
Diluted adjusted earnings per
share 0.15 p 0.51 p 1.50 p
========================================= ============ ============ ===========
Total Group
Basic earnings per share 1.11 p 1.45 p 1.60 p
Diluted earnings per share 1.08 p 1.40 p 1.54 p
Adjusted earnings per share 3.59 p 3.55 p 6.26 p
Diluted adjusted earnings per
share 3.49 p 3.44 p 6.02 p
========================================= ============ ============ ===========
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
Continuing operations GBP'000 GBP'000 GBP'000
========================================= ============ ============ ===========
Profit/(loss) for the period 716 638 (10)
(Profit)/loss attributable to
non-controlling interests (8) 21 37
========================================= ============ ============ ===========
Profit attributable to equity
holders of the Company 708 659 27
========================================= ============ ============ ===========
Reconciliation to adjusted profit:
Acquisition costs - 503 575
Amortisation of intangible assets 1,460 1,474 2,921
Exceptional income (41) (875) (875)
Revaluation of contingent consideration 62 - -
Amortisation of bank fees - 6 6
Share based payments 767 646 1,447
Tax impact of above adjustments (415) (249) (699)
========================================= ============ ============ ===========
Adjusted profit for the period 2,541 2,164 3,402
========================================= ============ ============ ===========
Number of shares '000s '000s '000s
Weighted average number of
shares 73,627 71,434 72,187
Bonus element from share placing
in July 2019 140 140 140
Basic 73,767 71,574 72,327
Impact of dilutive share options 2,381 2,254 2,938
Diluted 76,148 73,828 75,265
=================================== ======= ======= =======
The bonus element increasing the basic number of shares used in
the earnings per share calculation arises from the placing of
8,000,000 shares in July 2019 and represents the number of shares
effectively issued without consideration, due to the issue price of
125 pence being at a discount on the market price of 127.5 pence
prior to the placing. In accordance with IAS 33, the impact of the
bonus element is allocated to all reporting periods prior to that
in which the placing took place.
The dilutive share options are in respect of the shares awarded
under the Blancco Performance Share Plan.
3. Profit for the period
The figures for the Group's continuing operations are as
follows:
6 months 6 months
ended 31 ended 31 Year ended
December December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
======================================= ============ ============ ===========
Depreciation of property, plant and
equipment - owned 128 120 273
Depreciation of property, plant and
equipment - right-of-use asset 449 406 827
Profit on disposal of property, plant
and equipment (5) (2) (1)
Amortisation of intangible assets 3,289 2,870 5,912
Expenses related to leases of
low-value assets 12 12 24
Cost of inventories recognised
as an expense 129 197 347
Research & Development expense 458 522 1,121
Staff costs 8,260 8,266 16,230
Net foreign exchange (profit)/loss (127) (216) 101
========================================= ============ ============ ===========
4. Exceptional and acquisition (income)/costs
6 months 6 months
ended 31 ended 31 Year ended
December December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
============================ ============ ============ ===========
Provision releases (41) (875) (875)
Acquisition and deal costs - 503 575
============================== ============ ============ ===========
(41) (372) (300)
============================ ============ ============ ===========
Exceptional income arises from the release of a provision
recognised on the acquisition of SafeIT (in the prior year
Xcaliber) that the business deems to no longer be required. This
covers an item that was exceptional in nature and does not relate
to the underlying operating expenses of the acquired business and
accordingly the release was recorded through exceptional
income.
Acquisition costs in the prior period relate to the acquisition
of YouGetItBack Limited and the buyouts of minority interest stakes
in Japan and Singapore.
5. Discontinued Operations
The post-tax results from discontinued operations in the period
was a non-cash profit of GBP0.1 million (H1 2020: GBP0.4 million).
This arose from the reassessment of provisions over time that were
created upon the disposal of the Repair Services business in the
year ended 30 June 2016.
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END
IR VELFFFLLXBBK
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