23 Jun 2017 07:00
blur Group Plc
("blur", the "Group" or the "Company")
Update on financing, business plan and current trading
Update on financing and working capital
As detailed within blur's quarterly business update announced on 8 February 2017, cash burn for Q4 FY2016 was $0.9 million ($1.0m in Q3 2016). This rate of cash burn has stayed broadly constant in the year to date, with cash balances at 31 May 2017 being $1.14m.
As a result of the current cash balances of the Company and in order to provide additional financing to deliver the board's updated business plan (as set out further below), market soundings with new and existing potential cornerstone investors have taken place. Some of the investment terms put forward in these discussions included a number of onerous conditions which the board considered were not in the best interests of shareholders. As such, the board is currently evaluating alternative sources of near-term funding, which may or may not be forthcoming, within the next three to six weeks. If alternative sources of financing are not available the board would be required to take action to protect the interests of creditors and which could result in the value attributable to shareholders being severely reduced or becoming nil. Further announcements will be made at the appropriate time.
Business plan and continued EBITDA improvements
The Group's business plan for the coming months focuses on furthering its enterprise customer strategy by establishing additional high value relationships with blue chip multinational customers from a variety of sectors, whilst optimising the cash requirement of the business and shortening the path to profits. This is planned to be achieved by implementing a number of actions intended to further focus and streamline the business. These include:
· reduction in fixed salaries and fees of the management team and board and a shift towards a more incentive-based remuneration approach
· as the head office lease reaches its conclusion in the coming period, assessing the suitability of current rented office space and evaluating potentially more efficient alternatives
· more tightly focused Sales and Marketing effort prioritising specific enterprise targets, to maximise the return on investment
· ensuring delivery teams are appropriately sized as platform roll outs are achieved with higher levels of automation across blur's platform
· ensuring appropriate level of investment in blur's technology given the recent releases increasing both automation and functionality
· optimisation of overall operational costs, providing sufficient resources for current levels of trading as well as ability to grow revenues
Through the progress achieved so far in increased automation in the blur software platform and implementation of the actions above, blur expects its 2018 cost base to be less than half that in 2016 which the company expects to lead to improvements in EBITDA performance.
Update on customer engagements
blur Group is engaged with several multi-national, blue chip companies, working with them to address their indirect services procurement requirements. A summary of these engagements is below:
Top 100 UK-based law firm - blur is working with this customer on a multi-year, multi-six figure contract for document management archiving services following an extensive selection process.
Leading home appliance manufacturer - blur has concluded its first project with this customer and is currently finalising the supplier selection process for a second. In addition blur has just commenced a third, high value project. blur sees potential for a wider roll out of its platform with this customer.
FTSE 250 multi-channel retail group - having placed orders worth over $250,000 of revenue with blur to date, this customer has recently placed a new project worth $25,000 and is discussing a further new project.
Leading manufacturer of powered garden equipment - blur has a project in progress with this customer and is working with them to become its strategic marketing procurement partner.
Large UK county council - blur has successfully completed its first trial project for this customer and is engaged in discussions regarding a wider roll out of blur's platform
Leading international business school - In Q2 blur has started working with a leading international business school and has recently kicked off a first project.
In addition, blur is engaged with the following:
Global electronics group - blur is working on signing a sizeable Master Services Agreement (MSA) and Engagement letter with this Enterprise. It is expected that the MSA will be agreed early in Q3 2017. blur will commence an on boarding programme with this customer shortly thereafter.
Global sportswear retailer - following the submission of a detailed, one-region proposal and review of that proposal by the company's Procurement Senior Leadership Team, blur has been asked to work with this Enterprise to establish a wider, global proposal.
blur is also actively engaged in early discussions with a number of other significant businesses and organisations.
Current trading and Q1 2017 quarterly update
Trading since 31 December 2016 has been in line with Director's expectations and the Company expects to announce its final results for the period to 31 December 2016 on 29 June 2017.
In Q1 2017, blur's key metrics were:
ALL ORDERS | Q4 2016 | Q1 2017 |
CHANGE |
| No. | No. | % |
Pitching On | 117 | 151 | +29.1 |
Kicked Off | 32 | 47 | +46.9 |
Completed | 54 | 55 | +1.2 |
ENTERPRISE ORDERS ONLY* | Q4 2016 | Q1 2017 |
CHANGE |
| No. | No. | % |
Pitching On | 87 | 140 | +60.9 |
Kicked Off | 5 | 28 | +460.0 |
Completed | 29 | 2 | -93.1 |
*blur defines the Enterprise as a business with 50 or more employees
· Cash burn in Q1 2017, excluding foreign exchange movements was $0.9 million. Marginally reduced compared with Q4 2016
· Volumes of transactions from enterprise customers grew over Q4 2016 as blur worked on sourcing a multi-year programme and contract for document management with a Top-100 UK law firm
· Cash at the end of Q1 2017 was $1.7 million
· blur's 2nd buyer plan subscription taken up in Q2 2017 by a leading home appliance manufacturer. The 1st buyer plan subscription was taken by a Top-100 UK law firm in Q4 2016.
Board changes and committees
It is expected that Board changes will be implemented to position the Group for the next phase of its growth. The exact nature of these changes are to be confirmed. Further details of this and the resulting structure of the Board Committees will be announced once they are in place.
Market soundings
This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). Market soundings (as defined in MAR) were taken in respect of a potential equity fundraising with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities
Enquiries:
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blur Group plc Tel: +44 (0) 1392 927618
Tim Allen
N+1 Singer (Nominated Adviser & Broker) Tel: +44 (0) 20 7496 3000
Shaun Dobson
James White