19 Jan 2018 07:00
Friday 19 January 2018
BLANCCO TECHNOLOGY GROUP PLC
("Blancco" the "Company" or the "Group")
TRADING UPDATE AND NOTICE OF RESULTS
Blancco Technology Group PLC (AIM: BLTG, "Blancco"), a leading global provider of mobile device diagnostics and secure data erasure solutions, today issues this trading update for the six months to 31 December 2017, in advance of its half yearly results which will be announced on 20 March 2018.
During the six months to the end of December 2017 significant management time and effort was focused on the immediate priorities required to place Blancco on the best operational and financial footing following the resignation of the CEO and the review of the accounting for contracts and financial controls.
Revenue in the first half of the current financial year was marginally behind that of the same period last year, but we expect trading to grow during the second half leading to positive full year revenue growth. The impact of currency has been slightly adverse following the strengthening of Sterling.
Results for the six months to 31 December 2016 included a number of non-repeating volume sales deals, where revenue was recognised up front on the sale of software covering multiple future years. Several of these replaced deals previously contracted and recognised over time on a monthly basis. These were not due for renewal during December 2017 impacting Blancco's comparative year on year revenue and the contract renewal rate. New client contracts won during the current period did not fully mitigate the impact of last year's non-repeating deals.
Overall the Group's Erasure division saw a decline in year on year sales due to the non-renewal of multiyear End of Life Erasure contracts as mentioned above. Mobile Erasure saw a substantial growth rate as we secured numerous new clients.
The Group's Mobile Diagnostics division, remained flat, in line with management's expectations for the first half.
As we expected, Adjusted Operating Profit (AOP) was lower than in the prior year, due to the lower revenue and the significant SG&A costs taken on during Q2 and Q3 of the prior year flowing through the first half this year. Adjusted Operating Profit margin percentage was lower than full year guidance, but was better than our first half expectations, following the reorganisation and cost savings made between September and December 2017.
We now expect full year revenues to be towards the lower end of our guidance range while AOP and cashflow remain in line.
During the period we also negotiated the sale of our Mexican legal entity, which will become a distributor of Blancco products in the LATAM region, consequently we have reclassified the results of the Mexican business as discontinued and treated them appropriately in the current and prior financial periods. We believe that this structure will benefit both parties to the transaction and promote the growth of Blancco services in the region.
Payments related to the restructuring of the management team and a legacy payment relating to prior year M&A have reduced cash balances since the financial year end, however, the Group's operating cash flow before interest and tax remains positive.
The CEO recruitment process is progressing well and we will update the market at the appropriate time.
The Board is confident that we have considerably improved the functioning of the business, which stands Blancco in much better stead for the new CEO to execute a sustainable growth strategy, allowing the Group to leverage its market leading position and take advantage of growing demand.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/ 2014.
Blancco Technology Group Plc +44 (0) 20 3657 7000
Simon Herrick, Interim Chief Executive Officer & Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0) 20 7418 8900
Edward Knight
Nick Prowting
Panmure Gordon (UK) Limited (Joint Broker) +44 (0) 20 7886 2500
Dominic Morley, Corporate Finance
Charles Leigh Pemberton, Corporate Broking
Tulchan Communications +44 (0) 20 7353 4200
Tom Murray
Matt Low
About Blancco
Blancco Technology Group is a leading global provider of mobile device diagnostics and secure data erasure solutions. For more information, please visit www.blanccotechnologygroup.com.