Blancco revenue stable as it works through Covid-19 crisis

(Sharecast News) - Data erasure and mobile diagnostics technology company Blancco reported stable revenue in its first half on Tuesday, coming in at £17.4m, in line with the prior year.

The AIM-traded firm said its gross profit was down 2% year-on-year in the six months ended 31 December, at £16.2m, while its adjusted EBITDA rose 20% to £5.3m.

Its adjusted operating profit was 16% firmer at £2.9m, as its operating profit slipped 4% from the prior year to £0.7m.

Profit before tax slid 21%, to end the period at £0.5m.

Blancco said its adjusted operating cash flow grew by 130% to £5.4m and its cash generated from continuing operations were 215% higher at £5m, as its net cash grew to £8.2m from £5.4m a year earlier.

Diluted earnings per share were down 23% year-on-year at 1.08p.

On the operational front, Blancco reported the continued expansion of its network of blue-chip channel partnerships in its enterprise market, with channel revenue now representing 47% of divisional revenue, up from 40% a year prior.

A master services agreement was signed with a major global systems integrator, while an agreement with Deloitte extended beyond India into the broader Asian region.

Blancco also signed a deal with US government IT solutions provider Carahsoft Technology Group to provide solutions through the AWS Marketplace.

The firm reported a "significant increase" in the volume of mobile handsets being handled by mobile customers despite the disruption to retail caused to Covid-19, signalling that the secondhand mobile market was developing rapidly on a global basis.

It also established a partnership with a new global insurer on a mobile handset insurance programme during the period.

Looking at its current trading, Blancco said its pipeline and early third quarter sales activity gave rise to "confidence" over the strong growth expected in the second half.

Data security and environmental, social and governance (ESG) considerations were expected to drive growth in both the ITAD and enterprise segments as trading conditions normalised post-Covid-19.

Blancco said it was "well-positioned" to move into its next phase of growth, as it capitalised on "strong" structural tailwinds, and data sanitisation and diagnostic technologies.

Revenue and profit growth was continuing in line with the board's expectations, the directors reported.

"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 £1.4m 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," said chief executive officer Matt Jones.

"We believe that the results generated in the Asia-Pacific 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."

Jones said that, while there was ongoing uncertainty arising from the Covid-19 pandemic, the firm was "optimistic" that it was well-placed to prosper as global trading conditions returned 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."

At 1425 GMT, shares in Blancco Technology Group were down 2.64% at 258p.