Good morning!

It's Labor Day in the US which tends to make the global financial markets a lot quieter than usual. US institutions will be taking the day off.

And while the North Korean hydrogen bomb test might have spooked a few people, the FTSE is only a few points lower as of 8.45. Gold is up another 1% around its 1-year highs.

I don't usually devote any time to macro issues here, but Wall Street being closed and a hydrogen bomb seemed worth mentioning!

I will be starting stock coverage with Blancco Technology (LON:BLTG).

Cheers,

Graham




Blancco Technology (LON:BLTG)

  • Share price: 77p (-25%)
  • No. of shares: 64 million
  • Market cap: £49 million

Updates on Revenue and Management

There has been a sea of red flags here for considerable time, both at Blancco and at its predecessor entity Regenersis.

In stock investing, there is such a thing as a smell test, and when a company fails it then you are nearly always better off staying away.

For a review of the various ways that Blancco has stood out as a low-quality offering, have a look through the archives here. It's very genesis as a stock market company was in a failed growth strategy dreamed up by investment bankers. Its accounts have been a mess, cash flow and balance sheet weak, key people have left, etc.

The red flags keep piling up here:

Blancco Technology Group plc announces that, following matters that have recently come to the Board's attention, the Board has decided to reverse £2.9m of revenues represented in two contracts that had previously been booked during the financial year ended 30 June 2017

Revenue growth is still expected to be quite large (15% in constant currency), and cash flow is not impacted. But it confirms over-aggression in the company's revenue recognition policies.

The CEO tacitly takes responsibility by leaving with immediate effect, and the CFO becomes the new Interim CEO.

Remember that the Chairman is leaving next month, and we already had a CFO resignation in March this year.

Something has been rotten about this share from the beginning. In my opinion, it's not yet investible from a corporate governance point of view. Well done to the Stockopedia algorithms for identifying it as a Sucker…

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