REG - Blancco Tech Grp PLC - Interim Results
21/02/2023 07:00
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RNS Number : 4963Q Blancco Technology Group PLC 21 February 2023
21 February 2023
Blancco Technology Group plc
Interim results for the six months ended 31 December 2022
Increasing Sustainability and Governance tailwinds accelerate double-digit
growth
Blancco Technology Group plc (AIM: BLTG, "Blancco", the "Company" or the
"Group"), the industry standard in data erasure and mobile lifecycle
solutions, is pleased to announce its interim results for the six months
ended 31 December 2022 (the "Period").
FINANCIAL HIGHLIGHTS
£m unless otherwise stated H1 FY23 H1 FY22 Change
Revenue 24.0 19.7 +22%
Gross profit 23.5 19.1 +23%
Adjusted EBITDA* 8.0 6.4 +24%
Adjusted operating profit* 5.1 4.0 +30%
Operating profit 2.7 1.9 +42%
Profit before tax 2.6 1.8 +42%
Adjusted operating cash flow** 5.3 4.7 +15%
Cash generated from continuing operations 5.3 4.6 +14%
Diluted earnings per share 2.91p 1.94p +50%
Net funds 7.9 10.2 -22%
· Strong revenue growth of 22%, 16% when adjusted for constant
exchange rates ("CER"):
· Enterprise revenue increased by 33% (CER +24%) to £9.4 million
(H1 FY 2022: £7.1 million)
· IT Asset Disposition ("ITAD") revenue increased by 30% (CER +25%)
to £9.0 million (H1 FY 2022: £6.9 million)
· Mobile revenue fell slightly by 1% (CER -3%) to £5.6 million (H1
FY 2022: £5.7 million) as sales of new smartphones slowed, impacting the
trade of used handsets in the period
· Double digit constant currency growth in each of our three
geographies:
· North America revenue increased by 39% (CER +22%) to £8.0
million (H1 FY 2022: £5.8 million)
· EMEA revenue increased by 12% (CER +10%) to £8.7 million (H1 FY
2022: £7.7 million)
· APAC revenue increased by 19% (CER +19%) to £7.3 million (H1 FY
2022: £6.2 million)
· Net funds increased to £7.9 million from £6.2 million on 30
June 2022
· Gross margins remain strong, edging higher to 98% (H1 FY 2022:
97%)
· Adjusted operating margin of 21% (H1 FY 2022: 20%), despite
pressures from wage inflation and US dollar strength. Adjusted Operating
Profit* increased to £5.1 million (H1 FY 2022: £4.0 million). Operating
Profit grew to £2.7 million (H1 FY 2022: £1.9 million)
· Adjusted EBITDA* increased to £8.0 million (H1 FY 2022: £6.4
million). EBITDA grew to £7.2 million (H1 FY 2022: £5.7 million)
OPERATIONAL HIGHLIGHTS
· Accretive acquisition of US-based erasure specialist WipeDrive,
which completed in June 2022, is now fully integrated and contributed revenue
of £0.9 million in the Period
· Continued focus on developing channel partners to sell our
solutions to Enterprise customers saw revenue from channel partners grow by
30% in the period to £5.2 million (H1 FY 2022: £4.0 million)
· Sustainability credentials further strengthened by achieving an
MSCI AA rating
· Partnership with Ebay agreed to introduce condition grading on
computer equipment and mobile handsets enabling ITAD and mobile customers to
sell equipment on the Ebay platform
· Won new SaaS contract worth US$0.5 million per annum with one of
the largest software companies in the world following our introduction of a
Microsoft Windows interface to the Blancco Erasure solution
· New partnership signed with Tata Consultancy Services to provide
Erasure as a Service ("EaaS") to their largest customers
CURRENT TRADING AND OUTLOOK
· The appointment of a new President of Global Sales and a Vice
President of Americas Sales in 2022 have driven incremental revenue growth and
strengthened the opportunity pipeline
· WipeDrive team fully integrated with a single product across
the Group now rolled out to customers
· Enterprise remains the fastest growing market and will
continue to represent an increasingly large portion of group revenue
· The Company continues to trade well and has a strong pipeline
of opportunities as we enter the second half of the financial year, supported
by strengthening regulatory and environmental drivers, providing confidence
that the Board's full year expectations will be achieved whilst remaining
cautious regarding macro-economic conditions
Matt Jones, Chief Executive of Blancco, said:
"These results for the first six months of the financial year show strong
double-digit growth in revenue, profit and cash despite the macro-economic
challenges seen in many of the territories in which we operate.
We announced at our last results in September that we had restructured our
global sales team with the appointment of new leaders for our sales
organisation. I'm pleased to report that they have managed to have an
immediate impact on the financial growth of the company as demonstrated in
these results as well as our pipeline of opportunities.
We have also fully integrated the excellent team of professionals that joined
Blancco through the earnings accretive acquisition of WipeDrive in June 2022.
The vast majority of WipeDrive employees now have a role in the larger Blancco
group and have supported our move to a single erasure solution for customers.
Existing and upcoming regulation on data security coupled with near-term
legislation on sustainability means Blancco's proposition is more relevant
than ever before, and the Board remains confident in the continued growth
prospects of the company."
Note:
*Adjusted operating profit is operating profit excluding expenses relating to
share option schemes, exceptional costs & incomes and the amortisation of
acquired intangible assets. Adjusted EBITDA is adjusted operating profit after
adding back depreciation and amortisation.
** Adjusted operating cash flow is operating cash flow excluding taxation,
payments relating to share option schemes, interest payments & receipts
and exceptional payments
Presentation and webcast:
A virtual briefing for analysts will be held today, 21 February 2023 at 15.00
GMT, via a live webcast and conference call facility.
If you would like to join the webcast or conference call, please contact
Buchanan at blancco@buchanan.uk.com (mailto:blancco@buchanan.uk.com)
ENDS
For further information:
Blancco Technology Group plc Via Buchanan
Matt Jones, Chief Executive Officer
Adam Moloney, Chief Financial Officer
Investec Bank plc (Nominated Advisor & Joint Broker) +44 (0) 20 7597 5970
Patrick Robb / Nick Prowting / Virginia Bull
Stifel (Joint Broker)
Nick Adams / Alex Price / Richard Short
Buchanan Communications Limited +44 (0) 20 7466 5000
Chris Lane / Jack Devoy
blancco@buchanan.uk.com (mailto:blancco@buchanan.uk.com)
About Blancco
Blancco Technology Group plc is a leading global provider of mobile lifecycle
solutions and secure data erasure solutions. For more information, please
visit www.blancco.com (http://www.blancco.com) .
CHIEF EXECUTIVE'S REPORT
Business overview
We are delighted to be able to report a very robust set of results for the
first six months of our financial year, where Group revenue grew by 16% (when
adjusted for currency movements) despite the challenging macro-economic
environment and a strong comparative period. While it is accepted that many
companies are in a period of financial constraint, data security is an area
where corners cannot be cut, and the adoption of software data erasure
typically saves money for companies that had previously used the physical
destruction of assets to ensure data security. The use of data erasure
software is also a cost-effective way for companies to improve their
environmental impact by vastly reducing their generation of e-waste.
We are particularly pleased that the changes made to the leadership of our
sales and marketing function, as disclosed in detail in our FY22 Annual
Report, have seen an immediate acceleration of growth in the business, as
evidenced by these results. Initiatives have been launched by the leadership
team regarding pricing and the further development of our channel network
which will continue to have a positive impact as the actions arising from this
work are rolled out across the organisation.
In June 2022 we announced the acquisition of WipeDrive Inc ("WipeDrive") and
have now fully integrated the company within the wider Blancco group. The vast
majority of WipeDrive employees have filled critical roles in the enlarged
organisation and assisted in launching a single "best of breed" solution that
took the best features of the Blancco and WipeDrive solutions and which has
been well received by the Group's enlarged customer base.
Regulatory Environment
There are two forms of regulation that form the primary growth drivers for
Blancco;
i) Data Privacy & Security
EU General Data Protection Regulation ("GDPR") was the first major piece of
regulation which had the potential to impose severe penalties on any companies
which failed to protect the personal data that they held. The maximum
penalties under GDPR are the higher of €20 million or 4% of global revenue.
In 2022, Instagram Meta was fined €405 million, the second largest fine ever
issued under GDPR, due to the exposure of personal details of minors. This
follows on from the record fine of €746 million issued to Amazon in 2021.
Following the introduction of GDPR, we have seen similar regulations being
introduced in most other parts of the world. Gartner has forecast that by the
end of the 2023 calendar year, they expect 75% of the world's population will
have their personal data protected under modern privacy regulations.
Of particular relevance, the implementation of the California Privacy Rights
Act ("CPRA") is effective from 1 January 2023 and follows on from the
California Consumer Privacy Act ("CCPA") enacted in 2020. These regulations
affect all organisations with more than US$25 million of gross annual revenue
that conduct business in California. California is typically seen as a leading
state in the US with regard to the introduction of regulation and we are
already seeing several other states including Colorado, Utah, Connecticut and
Virginia implementing similar laws.
This increasingly regulated environment means that companies must continue to
ensure that customer data they store is protected. A particularly relevant
example for Blancco was the major US bank that was fined a total of US$95
million by the US Office of the Controller of Currency and the Stock Exchange
Commission for failing to properly dispose of devices containing Personally
Identifiable Information (PII) of 15 million customers. As part of the
corrective action taken, this bank is now a customer of Blancco.
ii) Environmental
Unlike the Data Privacy regulation, environmental regulation is very much at
the early stages. The EU is again leading the way with the European Green Deal
which is a package of policy initiatives aiming to set the EU on the path to a
green transition, with the ultimate goal of reaching climate neutrality by
2050. As part of the Green Deal, the Corporate Sustainability Reporting
Directive (CSRD) includes the mandate to disclose sustainability information
under the reporting framework of the European Sustainability Reporting
Standards (ESRS). These regulations will be phased in from 1 January 2024 and
will require companies to provide information on the environmental impact of
their organisation including its use of resources and the circular economy.
Similarly, the US Securities and Exchange Commission announced in 2022 that it
is proposing to require registrants to include certain climate related
disclosures in their registration statements and periodic reports.
The challenge for Blancco has always been to persuade companies which
currently destroy their IT assets, to using data erasure as the mechanism to
ensure data security. Whilst the use of data erasure is more time and cost
effective than physical destruction, IT departments have often been reluctant
to consider alternative methods. The focus on e-waste caused by the
implementation of directives forcing companies to disclose information on
their environmental impact is resulting in change as companies push towards
carbon neutral and net zero targets. Those charged with improving the
sustainability of companies will need to force change through IT departments
to ensure that redundant equipment no longer contributes to e-waste statistics
and instead helps the circular economy.
Enterprise
The Enterprise market continues to be the fastest growing market that Blancco
solutions are sold into. In FY18, the period when we originally set out
Blancco's growth strategy, Enterprise was the smallest of Blancco's three
markets and represented 32% of Group revenue. In the first half of FY23,
Enterprise represented 39% of Group revenue and it is now Blancco's largest
market. Revenue in Enterprise grew by 33% (CER +24%) in the period to £9.4
million (H1 FY 2022: £7.1 million). In FY18, 42% of Enterprise revenue came
through Channel partners. In the period, revenue from Channel partners
increased by 30% to £5.2 million (H1 FY 2022: £4.0 million) and now
represents 56% of Enterprise revenue.
We anticipate that the regulatory drivers around data privacy and
sustainability will continue to impact the largest companies in the world
which tend to store the greatest amounts of data. As a result, we believe that
Enterprise will continue to be the fastest growing market that Blancco sells
to and much of this growth will be driven by further investment with our
channel partners whose sales will represent an increasingly large proportion
of our Enterprise revenues. We continue to review our channel partner base,
investing the most effort with the partners that have the greatest potential
for revenue generation and engaging with new partners who can assist us with
growing the business.
An example would be the new partnership we have established with Tata
Consultancy Services ("TCS"). TCS is an Indian multinational information
technology services and consulting company with over 613,000 employees in 55
countries. TCS is seeking to utilise Blancco within its customer base to
maximise their sustainability and data privacy credentials, primarily within
the healthcare and financial services verticals. A material pipeline of
opportunities has already been generated prompting Blancco to employ a
dedicated resource to work within TCS, promoting the Blancco offering.
The acquisition of WipeDrive, completed in June 2022, has enabled us to
further strengthen our market position. WipeDrive Enterprise customers
generated revenue of £0.4 million in the period. WipeDrive customers are
being migrated to the new "best of breed" solution which will make WipeDrive
revenue impossible to separate from Blancco revenue in future financial
disclosure. One of the features we were pleased to introduce as part of this
merging of technologies is the development of a Microsoft Windows interface
for our erasure solution. This user interface improvement has helped us to win
a large contract with one of the biggest software companies in the world.
There is significant opportunity to grow that account much further, as there
is in many of our larger accounts. WipeDrive has also helped grow our presence
in the US market, particularly with government agencies.
IT Asset Disposition ("ITAD")
Blancco's ITAD customers operate as experts in the disposal of end-of-life IT
assets, primarily for companies which are smaller than those which purchase
licences directly from Blancco in the Enterprise market. We reported in the
FY22 financial year that these customers had experienced a period of
accelerated growth as employees returned to offices following the pandemic.
For many companies, a backlog of end-of-life hardware needed to be processed
and many companies had to reconfigure office space and equipment distribution
to accommodate a more hybrid working workforce. This trend led to revenue
growth of 23% when adjusting for foreign exchange movements in FY22. This has
continued into the first half of FY23 with revenue growing by 30% (CER +25%)
to £9.0 million (H1 FY 2022: £6.9 million).
With most parts of the world now having returned to a steadier pattern of
work, there are signs that this period of accelerated growth is settling to
more normal patterns. From FY18 to FY22, ITAD revenue has grown from £8.6
million to £13.8 million, an annual growth rate of 13%. Blancco has a very
large share of the data erasure market within ITADs which limits our ability
to substantially grow market share. However, the data privacy and
sustainability drivers that are apparent in the Enterprise market are also
leading to growth in the overall market that ITADs address, which generally
comprises smaller companies which engage with third parties to dispose of
their end-of-life equipment. As a result, the growth in ITAD has continued to
exceed our initial expectations and we anticipate that the growth seen since
FY18 should be sustainable in the coming periods. The acquisition of WipeDrive
has also enabled us to strengthen our position in this market. WipeDrive ITAD
customers generated revenue of £0.5 million in the first six months of FY23.
This market leading position has been strengthened further recently by the
announcement of our new partnership with Ebay. ITAD and Mobile customers will
be able to use the Blancco solution to categorise or grade the condition of
devices for sale on the Ebay platform on a consistent basis. This will give
buyers confidence in purchasing computer equipment or mobile devices on the
platform, making it simpler for ITADs and Mobile processors to recycle
equipment from which they have erased the data after collecting it from their
customers.
Mobile
Given the current macroeconomic backdrop, mobile continues to be the most
challenging market for Blancco. IDC reported that new smartphone sales in the
first three quarters of 2022 were 9.7% lower than the comparative period of
2021. There is a combination of factors which are likely to have contributed
to this trend - supply chain issues and component shortages have continued to
be a constraint, fears of a reduction in disposable incomes, foreign currency
movements and a lack of innovation in the latest generation of handsets are
all thought to be contributory factors. Blancco's revenue is largely driven by
the volume of pre-owned handsets received by our customers when new handsets
are purchased, and older handsets are traded in. All Blancco Mobile customers
have reported reduced volumes of handsets being processed in the period.
Despite this background, Blancco Mobile revenue fell by only 1% (CER -3%) to
£5.6 million (H1 FY 2022: £5.7 million) which indicates an increase in
market share given that the size of the overall market has reduced. There are
no immediate signs of an improvement in the Mobile market, and we expect it to
remain relatively flat for the next 12 months. However, in the medium term we
continue to believe that the Mobile market will improve as the handsets
currently held by consumers continue to age and economic conditions improve.
We also believe that consumers will be more inclined to trade in older
handsets when buying a new handset than they have been in the past due to the
increasing value of aging handsets. While the revenue trend doesn't show the
same growth that we see in ITAD and Enterprise, it continues to be a
materially profitable part of the business which contributes significantly to
the profitability of the Group as a whole.
Summary and Outlook
The results announced today demonstrate the strong progress being made by the
business and give us further confidence in continued growth in revenue, profit
and cash as we look ahead. Data privacy regulation has been driving much of
the growth seen in recent years whilst the incoming regulation on
sustainability presents real opportunities for the future.
The new sales management team has now been with the Company for over six
months and has introduced initiatives around channel development and pricing,
the positive impact of which will come through in the near term. The impact of
pay increases awarded in our usual pay review in October and new headcount
that joined the Company in the first half of the financial year tends to
reduce operating margins in the second half of the year. However, the Company
continues to trade well and has a strong pipeline of opportunities as we enter
the second half of the financial year providing confidence that the Board's
full year expectations will be achieved.
Matt Jones
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
Revenue
Revenue in the period grew by 22% (CER +16%) to £24.0 million (H1 FY 2022:
£19.7 million). The strengthening of the US dollar had a materially positive
impact on the translated value of sales in the US in the Period, with North
America revenue growing by 39% to £8.0 million (H1 FY 2022: £5.8 million)
but the growth reducing to 22% when adjusted for foreign currency movements.
Revenue grew strongly in each of the three territories in which Blancco
operates.
6 months ended Growth rate Organic growth rate CER growth
31 December 2022 31 December 2021
Revenue (£ millions) 24.0 19.7 +22% +17% +16%
Revenue by geography
North America 8.0 5.8 +39% +22% +22%
EMEA 8.7 7.7 +12% +12% +10%
APAC 7.3 6.2 +19% +19% +19%
Revenue by market type
Enterprise 9.4 7.1 +33% +27% +24%
ITAD 9.0 6.9 +30% +22% +25%
Mobile 5.6 5.7 -1% -1% -3%
Profitability Measures
Gross margins remained high at 98% with only a small amount of hardware and
third-party licences accounted for as cost of goods sold. The strengthening of
the US dollar had a positive impact on revenue but a detrimental effect on our
US cost base, although this does create a natural hedge, which results in a
modest favourable foreign exchange impact at operating profit level.
Like many other companies, we have also seen the increasing cost of supplies
and wage inflation during the period. As a result, our adjusted administrative
expenses have increased by 22% to £18.4 million (H1 FY 2022: £15.1 million).
Despite these cost pressures, our adjusted operating profit margin has
increased to 21% (H1 FY 2022: £20%). These margins have increased gradually
over recent years with the adjusted operating margin in FY18 being 11%. We
continue to budget to increase these margins on an ongoing annualised basis,
although they are expected to contract as usual in the second half of the year
when pay increases for staff awarded in the first half of the year have a full
impact. Adjusted operating profit for the period increased by 30% to £5.1
million (H1 FY 2022: £4.0 million). Operating profit for the period was £2.7
million (H1 FY 2022: £1.9 million).
6 months ended 31 December 2022 6 months ended 31 December
2021
£'000 £'000
Operating profit 2,720 1,916
Amortisation of acquired intangible assets 1,673 1,337
Share-based payments charge 751 699
Adjusted operating profit 5,144 3,952
Depreciation of property, plant and equipment 632 554
Amortisation of intangible assets 2,204 1,912
(Profit)/loss on disposal of property, plant and equipment (1) 1
Adjusted EBITDA 7,979 6,419
Adjusted EBITDA for the period grew by 24% to £8.0 million (H1 FY 2022: £6.4
million), maintaining an adjusted EBITDA margin of 33% (H1 FY22: 33%).
Balance Sheet
Net funds increased to £7.9 million (30 June 2022: £6.2 million). We
anticipate further strong cash generation in the second half of the financial
year. However, a liability of £1.2 million is provided for in the balance
sheet in respect of the contingent consideration of up to US$1.5 million that
could become due to the vendors of WipeDrive in June 2023. The payment is
dependent on the retention of WipeDrive customers for a period of 12 months
following the acquisition. We are pleased to be able to report that the
retention of WipeDrive customers continues to be very positive and it is
expected that the full payment will be made in June 2023.
Adam Moloney
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2022
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2022
2022 2021 (audited)
(unaudited) (unaudited)
Note £'000 £'000 £'000
Revenue 24,025 19,676 39,799
Cost of sales (486) (588) (1,290)
Gross profit 23,539 19,088 38,509
Administrative expenses (including depreciation and amortisation) (20,819) (17,172) (36,627)
Operating profit 2,720 1,916 1,882
Acquisition costs - - 542
Amortisation of acquired intangible assets 1,673 1,337 2,683
Share-based payments charge 751 699 1,387
Adjusted administrative expenses (18,395) (15,136) (32,015)
Adjusted operating profit 5,144 3,952 6,494
Finance income 1 1 6
Finance costs (115) (85) (201)
Profit before tax 2,606 1,832 1,687
Taxation (364) (302) 364
Profit for the period 3 2,242 1,530 2,051
Attributable to:
Equity holders of the company 2,227 1,505 2,024
Non-controlling interests 15 25 27
Profit for the period 2,242 1,530 2,051
Earnings per share
Basic 2 2.96 p 2.01 p 2.71p
Diluted 2 2.91 p 1.94 p 2.64p
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2022
6 months ended 6 months ended Year ended
31 December 2022 31 December 2021 30 June
(unaudited) (unaudited) 2022
(audited)
£'000 £'000 £'000
Profit for the period 2,242 1,530 2,051
Other comprehensive income/(loss) - amounts that may be reclassified to profit
or loss in the future:
Exchange differences arising on translation of foreign entities 1,729 (995) 1,632
Total comprehensive income for the period 3,971 535 3,683
Attributable to:
Equity holders of the Company 3,938 523 3,691
Non-controlling interests 33 12 (8)
Total comprehensive income for the period 3,971 535 3,683
Condensed Consolidated Balance Sheet
as at 31 December 2022
31 December 2022 31 December 2021 30 June
(unaudited) (unaudited) 2022
(audited)
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 57,249 47,555 56,040
Other intangible assets 19,093 17,928 19,928
Property, plant and equipment 2,505 2,449 2,970
Deferred tax assets 100 99 107
78,947 68,031 79,045
Current assets
Inventory 163 166 216
Trade and other receivables 10,964 7,820 8,954
Current tax asset 690 579 641
Cash 8,443 10,205 8,195
20,260 18,770 18,006
Total assets 99,207 86,801 97,051
Current liabilities
Trade and other payables (8,721) (7,867) (9,433)
Contingent consideration (1,230) - (1,347)
Current tax liability (609) (380) (291)
(10,560) (8,247) (11,071)
Non-current liabilities
Borrowings (500) - (2,000)
Other payables (1,727) (1,268) (2,265)
Deferred tax (3,958) (2,766) (3,971)
(6,185) (4,034) (8,236)
Total liabilities (16,745) (12,281) (19,307)
Net assets 82,462 74,520 77,744
Equity
Called up share capital 1,514 1,513 1,513
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 3,568 (792) 1,857
Retained earnings 49,411 45,843 46,438
Total equity attributable to equity holders of the Company 81,874 73,945 77,189
Non-Controlling interest reserve 588 575 555
Total equity 82,462 74,520 77,744
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 December 2022
6 months ended 6 months ended Year
ended
31 December 2022 31 December 2021 30 June
(unaudited) (unaudited) 2022
(audited)
£'000 £'000 £'000
Balance at the start of the period 77,744 74,901 74,901
Total comprehensive income for the period 3,971 535 3,683
Purchase of Company's own shares - (1,546) (1,546)
Issue of shares 1 1 1
Share based payment charge inclusive of deferred tax 746 629 705
Balance at the end of the period 82,462 74,520 77,744
Consolidated Cash Flow Statement
for the six months ended 31 December 2022
6 months ended 6 months ended
31 December 2022 31 December 2021 Year ended
30 June
2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the period 2,242 1,530 2,051
Adjustments for:
Net finance charges 114 84 195
Tax expense/(income) 364 302 (364)
(Profit)/loss on disposal of property, plant and equipment (1) 1 -
Depreciation on property, plant and equipment 632 554 1,119
Amortisation of intangible assets 2,204 1,912 3,923
Amortisation of acquired intangible assets 1,673 1,337 2,683
Share-based payments expense 751 699 1,387
Operating cash flow before movement in working capital 7,979 6,419 10,994
Acquisition costs - - 542
Adjusted EBITDA 7,979 6,419 11,536
Decrease/(increase) in inventories 57 (54) (69)
Increase in receivables (1,828) (1,715) (2,092)
(Decrease)/increase in payables and accruals (928) (37) 1,496
Cash generated from continuing operations 5,280 4,613 10,329
Acquisition costs payments - - 355
Share-based payments 61 42 143
Adjusted operating cash flow 5,341 4,655 10,827
Interest paid on lease liabilities (57) (55) (110)
Other finance costs paid - - (25)
Tax paid (138) (187) (261)
Net cash generated from operating activities 5,085 4,371 9,933
Cash flows from investing activities
Purchase of property, plant and equipment (123) (62) (157)
Proceeds from sale of property, plant and equipment 7 - -
Purchase and development of intangible assets (2,520) (2,189) (4,453)
Acquisition of subsidiaries, net of cash acquired (111) - (6,873)
Net cash used in investing activities (2,747) (2,251) (11,483)
Cash flows from financing activities
Payment of the principal portion of lease liabilities (477) (373) (784)
Purchase of Company's own shares - (1,546) (1,546)
Issue of shares, net of fees 1 1 1
Interest received 1 67 73
Interest paid (54) (25) (58)
Drawdown of borrowings - - 3,000
Repayment of borrowings (1,500) - (1,000)
Net cash used in financing activities (2,029) (1,876) (314)
Net increase/(decrease) in cash and cash equivalents 309 244 (1,864)
Other non-cash movements - exchange rate changes (61) (110) (12)
Cash and cash equivalents at the beginning of period 8,195 10,071 10,071
Cash and cash equivalents at end of period 8,443 10,205 8,195
Borrowings (500) - (2,000)
Net funds 7,943 10,205 6,195
Notes to the Half Year Report
For the six months ended 31 December 2022
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 2023. 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 2022. The
directors are satisfied the going concern assumption remains appropriate and
the results have been prepared on that basis.
All UK adopted International Accounting Standards and interpretations
currently endorsed by the UK Endorsement Board, 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 2022 and should be
read in conjunction with the Group's annual financial statements for the year
ended 30 June 2022.
The condensed consolidated half yearly financial statements for the six months
to 31 December 2022 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
20 February 2023.
2. Earnings per share (EPS)
6 months ended 6 months ended Year ended
31 December 2022 31 December 2021 30 June
2022
(unaudited) (unaudited) (audited)
Pence Pence Pence
Basic earnings per share 2.96 p 2.01 p 2.71 p
Diluted earnings per share 2.91 p 1.94 p 2.64 p
Adjusted earnings per share 5.54 p 4.23 p 7.81 p
Diluted adjusted earnings per share 5.46 p 4.08 p 7.62 p
6 months ended 6 months ended Year ended
31 December 2022 31 December 2021 30 June
2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the period 2,242 1,530 2,051
Profit attributable to non-controlling interests (15) (25) (27)
Profit attributable to equity holders of the Company 2,227 1,505 2,024
Reconciliation to adjusted profit:
Amortisation of intangible assets 1,673 1,337 2,683
Acquisition costs - - 542
Amortisation of bank fees 4 4 8
Share based payments 751 699 1,387
Tax impact of above adjustments (485) (387) (800)
Adjusted profit for the period 4,170 3,158 5,844
Number of shares '000s '000s '000s
Weighted average number of shares 75,296 74,691 74,776
Impact of dilutive share options 1,127 2,646 1,877
Diluted 76,423 77,337 76,653
The dilutive share options are in respect of the shares awarded under the
Blancco Performance Share Plan and Sharesave Plan, full details of which are
disclosed in the 2022 Annual Report and Accounts.
3. Profit for the Period
Profit for the Period for the Group has been arrived at after
charging/(crediting):
6 months ended 6 months ended Year ended
31 December 2022 31 December 2021 30 June 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Depreciation of property, plant and equipment - owned 132 127 250
Depreciation of property, plant and equipment - right-of-use asset 500 427 869
(Profit)/loss on disposal of property, plant and equipment (1) 1 -
Amortisation of intangible assets 3,877 3,249 6,606
Expenses related to leases of low-value assets 11 11 27
Cost of inventories recognised as an expense 132 145 429
Research & Development expense 674 509 1,191
Staff costs 11,279 9,572 19,777
Net foreign exchange loss/(gain) 2 (52) 220
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