Growth back in focus

Blancco Technology Group 2 October 2018 Update
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Blancco Technology Group

Growth back in focus

FY18 results

Software & comp services

2 October 2018

Price

110.5p

Market cap

£71m

$1.32:£1

Net debt (£m) at end FY18

2.7

Shares in issue

64.0m

Free float

95.6%

Code

BLTG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

28.8

46.0

93.8

Rel (local)

30.9

48.2

88.8

52-week high/low

109.5p

48.0p

Business description

Blancco Technology Group develops and sells data erasure and mobile diagnostics software. Its headquarters are in the US and it has sales offices in 15 countries around the world.

Next events

AGM

12 December

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Alasdair Young

+44 (0)20 3077 5700

Blancco Technology Group is a research client of Edison Investment Research Limited

Blancco reported FY18 results marginally ahead of its recent trading update; despite the focus on stabilising the business and improving internal controls, profitability was maintained over the year. The new management team’s focus on three key markets (Mobile, Enterprise and IT Asset Disposition (ITAD)) and targeted investment in R&D should help the company maintain its market leadership and lead to a reacceleration of revenue growth.

Year end

Revenue (£m)

Adj. operating profit* (£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

06/17

26.9

3.2

2.65

0.7

41.8

0.6

06/18

27.5

3.3

4.61

0.0

24.0

N/A

06/19e

30.1

2.8

2.38

0.0

46.4

N/A

06/20e

33.2

3.6

3.33

0.0

33.2

N/A

Note: *Adjusted operating profit (AOP) and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY18 results reflect restructuring

With the interim management team focused on putting the company on a stronger financial footing, the focus was more on customer retention than new customer wins during FY18. Management is confident that it now has the necessary financial and operational controls within the business. Revenues increased 2.1% y-o-y (5% in constant currency), while firm control of costs resulted in an adjusted operating margin of 12%, effectively flat y-o-y. Year-end net debt was £2.7m, compared to net cash of £1.7m at end FY17 and net debt of £3.4m at end H118.

Focus on three key markets to reinvigorate growth

After a strategic review, the new management team has decided to focus on building the business from its already strong installed base of customers, with a focus on three key markets: Mobile, Enterprise/Data Centre and ITAD. To maintain market leadership, the company is increasing its investment in R&D and is keen to develop channel partnerships to widen the reach of its software. We have increased our cost base forecast for FY19 to reflect the increased investment, resulting in an adjusted operating margin of 9.3% for FY19. We forecast revenue growth of 10.4% and an adjusted operating margin of 10.8% for FY20. By the end of FY19, we expect all material contingent considerations on previous acquisitions to have been paid out.

Valuation: Reflects stabilisation

The stock has gained 46% since the July trading update, as confidence has increased that the business has stabilised and the new management team has been put in place. The stock is trading at a discount to its peer groups on EV/sales and EV/EBITDA multiples, with revenue growth and EBITDA profitability at the low end of the range. Evidence that growth is reaccelerating should provide support to the share price. Material partnership announcements could provide upside to our forecasts and the share price.

Review of FY18 results

Exhibit 1: Annual results highlights

Year end June (£m)

FY17

FY18e

FY18

% diff

% y-o-y

Revenues

26.9

27.2

27.5

1.2

2.1

Gross profit

25.8

25.9

26.4

1.8

2.3

Gross margin (%)

95.9%

95.5%

96.1%

0.6

0.1

EBITDA

5.0

5.5

5.9

5.6

18.0

EBITDA margin (%)

18.4%

20.4%

21.3%

0.9

2.9

Normalised operating profit

3.2

3.0

3.3

9.1

4.1

Normalised operating profit margin (%)

11.9%

11.2%

12.1%

0.9

0.2

Reported operating profit

(2.7)

(0.2)

(0.4)

86.4

(85.8)

Reported operating margin (%)

(10.0%)

(0.8%)

(1.4%)

(0.6)

8.6

Normalised PBT

2.9

2.8

3.1

11.1

6.0

Reported PBT

(1.9)

(0.5)

(0.3)

(36.1)

(82.9)

Normalised net income

1.5

1.8

2.9

59.8

90.5

Reported net income

(5.0)

(0.8)

0.3

(141.7)

(106.8)

Normalised basic EPS (p)

2.6

2.89

4.63

59.8

74.9

Normalised diluted EPS (p)

2.6

2.89

4.61

59.3

74.3

Reported basic EPS (p)

(8.8)

(1.3)

0.5

(141.7)

(106.2)

Dividend per share (p)

0.70

0.0

0.0

N/A

N/A

Net debt/(cash)

(1.7)

2.9

2.7

7.2

(256.5)

Source: Blancco Technology Group

Blancco reported FY18 results that were marginally ahead of our forecasts, which had recently been updated to reflect the July trading update. The company achieved modest revenue growth of 2.1% (5% in constant currency) for the year, with a 1.4% decline in H118 and 4.4% growth in H218. As a result of the cost-cutting implemented during the year, adjusted operating profit increased 4.1% y-o-y, resulting in a margin of 12.1%, slightly higher than a year ago. The main difference between actual and forecast normalised net income was a lower than expected normalised tax rate of 3.4% compared to our 22.7% forecast.

Net debt at year-end stood at £2.7m. The company made several exceptional payments during FY18: £1.4m in restructuring costs, £1.2m in contingent consideration and £1.9m in tax.

Exhibit 2: Invoiced revenues* by type

Invoiced revenues (£m)

H117

H217

H118

H218

FY17

FY18

FY18 constant currency

End of life (EOL) erasure

7.9

7.3

6.5

8.2

15.2

14.7

Mobile erasure

2.8

3.5

3.6

3.3

6.3

6.9

Active erasure

0.4

0.3

0.4

0.4

0.7

0.8

Professional services

0.9

0.6

0.6

0.5

1.5

1.1

Erasure total revenues

12.0

11.7

11.1

12.4

23.7

23.5

Diagnostics revenues

1.9

2.2

1.7

2.3

4.1

4.0

Total revenues

13.9

13.9

12.8

14.7

27.8

27.5

Year-on-year growth (%)

End of life erasure

(18%)

13%

(3%)

(1%)

Mobile erasure

29%

(5%)

10%

14%

Active erasure

0%

17%

4%

5%

Professional services

(33%)

(20%)

(28%)

(25%)

Erasure total revenues

(8%)

6%

(1%)

Diagnostics revenues

(11%)

5%

0%

5%

Total revenues

(8%)

6%

(1%)

2%

Source: Blancco Technology Group. Note: *Recognises volume and subscription sales at invoice, rather than spreading subscription sales over the term of the subscription.

Exhibit 2 shows the progress of revenues by type over the last four half-year periods. We note that the company is unlikely to report in this format in the future, as it is now selling products on the basis of type of customer rather than type of erasure. In some cases, customers will take both erasure and diagnostics solutions and it is difficult to split out the revenues. H218 group invoiced sales rebounded, after a decline in H118.

We note that after a weak half-year for end-of-life in H118, revenues recovered in H218, resulting in a small decline for the year. Mobile erasure saw growth for the full year, with significant contract wins in each region. Active erasure saw minimal growth over the year. Diagnostics revenues were flat year-on-year – the wind-down of some pre-acquisition Xcaliber contracts was offset by a large one-off contract in Asia Pacific.

Business update: Back on the front foot

As the company was going through a period of review and restructuring to put it on a stronger financial footing during H118 and went through a transition of the management team through FY18, the focus was not on driving new sales but on supporting the existing client base. Management now believes it has the right company structure and financial controls in place, and has decided that it will focus on the three key markets of Mobile, Enterprise/Data Centres and ITAD. Through FY19 it will work to reinvigorate the sales process and to target R&D on the first two markets.

Mobile: Demand for combined erasure and diagnostics

The mobile market has several sources of demand for erasure and diagnostics software. Phones are sold through retail locations, such as carrier-owned stores, and customers will often return phones to those locations for repair or will trade them in to upgrade to a new handset. Second-hand phones are available for sale from a variety of specialist companies such as Redeem or Flip4New. In both cases, second-hand phones will need to be wiped before they can be sold.

For faulty phones, diagnostic software is vital to ascertain why a phone is not working and how it can be fixed. Blancco’s diagnostic software is used by a large US carrier. Between February and November 2017, this customer used the software to test 1.3m so-called faulty mobile devices, of which only 0.6m were confirmed to have a fault. This meant that 0.7m devices did not need to be sent off for further investigation and repair, saving c $80 per device, or $56m in total.

There are multiple types of companies involved in the mobile market: carriers, retailers, buyback/trade-in companies, phone repair companies and third-party logistics and warehouse operators. The company sees a number of smaller and similar-sized competitors, but none with a fully comprehensive erasure/diagnostics solution. The company is keen to focus its R&D to develop solutions that address the whole mobile asset lifecycle.

Contract progress in FY18

The business has signed a renewed contract with a major US mobile carrier, worth more than $10m for the period up to March 2021. The contract covers 6,000 retail stores and renews the existing diagnostics contract as well as providing a combined diagnostics/erasure product to process second-hand phones. Blancco also signed a new contract worth $1m for in-store diagnostics for a major South Korean mobile carrier. With 13m subscribers and 1,100 retail stores, we believe this to be LG.

Enterprise/data centre: Emerging growth opportunity

Demand for erasure within the enterprise tends to be driven by the requirement to manage the data lifecycle within a business. In some cases, this will involve active erasure, ie erasure of specific files within a live environment, and in others, end-of-life erasure as PCs or servers are retired from use, sent off for repair or repurposed to be used elsewhere in the business. Blancco is focusing first on the data centre market, which has a regular cycle of asset investment.

Blancco has low penetration of this market, mainly due to lack of awareness by customers. One avenue to explore is working with OEMs such as Dell and HP to integrate Blancco’s software with their products. R&D is focused on developing a robust API architecture to enable this, as well as developing analytics tools.

Active erasure has seen limited take-up to date, often because before companies can erase data in a live environment, they need to know where exactly that data is stored within the company’s infrastructure (for example, multiple back-ups could exist). Blancco is considering working with data discovery software companies to provide a complete solution to find and erase critical data.

Contract progress in FY18

Blancco renewed a contract with a major multinational technology company to use the Data Centre Erasure solution to decommission servers in 20 of its data centres. The company expanded its relationship with a large multinational cloud-based software application provider to deploy the Data Centre Erasure solution in six new data centres opened in FY18. Blancco also signed a contract with a global major retailer to use the Drive Eraser solution on returned electronic purchases in locations across EMEA.

ITAD: Solid customer base, relatively mature market

Blancco has a well-established position as the leading supplier of erasure software to the ITAD companies; the company aims to maintain this position. It is a more mature market and as Blancco has such a strong market position, it is likely to be a slower growth business line. As such, it is not the main focus for R&D but should benefit from efforts to develop product enhancements for the other two markets.

Contract progress in FY18

Blancco renewed a contract with a major multinational ITAD company, which has more than 1,000 enterprise customers, for its Drive Eraser solution for an additional multi-year term.

Route to market: Shifting focus to the channel

The company has historically generated the vast majority of revenues via direct sales. It has a number of resellers but to date this has not generated a large contribution to revenues. During H218, it signed new distribution agreements with Arrow Electronics and Ingram Micro. It also launched its Erasure as a Service offering through its new Managed Service Provider Partner programme, leading to deals with 14 global and regional partners including Fujitsu and Techchef.

The company recently hired a new head of business development, Anders Klemmer, to focus on building partnerships with manufacturers, software companies and system integrators in the enterprise and mobile markets.

Outlook and changes to forecasts

Invoiced sales for the first two months of FY19 are ahead of the prior year period. Management expects to meet market expectations for revenue growth in FY19. It has, however, decided to increase investment in R&D, and expects this to have an impact on adjusted operating profit in FY19, but that this investment should help accelerate revenue growth and margins in FY20.

The debt facility was extended by 12 months to October 2020. At year-end the company had drawn down £8.9m of the £12.4m facility. At the end of FY18, there was a total of £2.2m in contingent consideration recorded on the balance sheet. We estimate that this equates to c £1.4m owing from the Tabernus acquisition and £1.0m owing from the Xcaliber acquisition. We forecast a pay-out of £2.4m in FY19 (reflects discount unwind), but we note that the company highlighted the possibility of settling the Tabernus consideration in equity rather than cash.

Exhibit 3: Changes to estimates

Year end June (£m)

FY19e

FY19e

FY20e

old

new

% change

% y-o-y

new

% y-o-y

Revenues

30.0

30.1

0.2

9.5

33.2

10.4

Gross profit

28.5

28.6

0.2

8.3

31.6

10.4

Gross margin (%)

95.0%

95.0%

0.0

(1.1)

95.0%

0.0

EBITDA

6.5

5.8

(11.2)

(1.2)

7.0

21.6

EBITDA margin (%)

21.7%

19.2%

(2.5)

(2.1)

21.2%

2.0

Normalised operating profit*

3.3

2.8

(15.8)

(16.0)

3.6

28.6

Normalised operating profit margin (%)

11.1%

9.3%

(1.8)

(2.8)

10.8%

1.5

Reported operating profit

(0.2)

(0.8)

366.3

109.2

(0.0)

(99.9)

Reported operating margin (%)

(0.6%)

(2.7%)

(2.1)

(1.3)

0.0%

2.7

Normalised PBT

2.9

2.4

(18.2)

(21.5)

3.2

33.3

Reported PBT

(0.8)

(1.4)

85.0

319.0

(0.4)

(71.9)

Normalised net income

1.9

1.5

(20.4)

(48.3)

2.1

39.7

Reported net income

(1.3)

(1.7)

35.9

(613.2)

(0.8)

(52.3)

Normalised basic EPS (p)

3.00

2.39

(20.4)

(48.3)

3.34

39.7

Normalised diluted EPS (p)

3.00

2.38

(20.7)

(48.3)

3.33

39.7

Reported basic EPS (p)

(2.1)

(2.8)

35.9

(613.2)

(1.3)

(52.3)

Dividend per share (p)

0.0

0.0

N/A

N/A

0.0

N/A

Net debt

1.8

3.7

106.4

35.8

1.7

(54.5)

Source: Edison Investment Research. Note: *Equivalent to Blancco’s adjusted operating profit.

Valuation

Despite gaining 46% since the July trading update, Blancco is trading at a discount to all peer groups on an EV/sales and EV/EBITDA basis. On a P/E basis, it is trading broadly in line with UK peers and at a discount to US peers. Its forecast revenue growth and EBITDA profitability are towards the lower end of its peers. Evidence that the focus on the three key markets is accelerating revenue growth should provide support to the share price.

Exhibit 4: Peer operating and valuation metrics

Market cap (m)

Sales FY1 (m)

Sales growth 1FY (%)

Sales growth 2FY (%)

EBITDA margin 1FY (%)

EBITDA margin 2FY (%)

EV/ sales 1FY (x)

EV/ sales 2FY (x)

EV/ EBITDA 1FY (x)

EV/ EBITDA 2FY (x)

PE 1FY (x)

PE 2FY (x)

EPS grth 1FY

EPS grth 2FY

Blancco

£71

30.1

9.5

10.4

19.2

21.2

2.4

2.2

12.7

10.4

46.4

33.2

(48.3)

39.7

UK cybersecurity

Avast

£2,765

823.1

26.1

7.5

54.1

52.9

6.0

5.6

11.1

10.5

13.7

12.5

N/A

9.7

GB Group

£882

132.5

10.7

9.9

22.3

22.3

6.6

6.0

29.4

26.7

39.8

36.1

77.9

10.3

Sophos Group

£2,379

731.3

14.1

13.9

12.9

20.5

4.6

4.0

35.3

19.5

57.0

48.6

(207)

17.4

UK high growth software

Craneware

£883

79.0

17.8

17.3

32.4

32.6

14.0

12.0

43.3

36.7

64.2

54.1

17.4

18.7

Dotdigital Group

£291

43.7

36.6

29.5

29.0

28.4

6.4

5.0

22.2

17.5

32.7

26.5

23.7

23.3

Ideagen

£350

44.0

21.8

11.4

30.2

31.2

7.9

7.1

26.2

22.8

33.5

29.8

397.1

12.5

Average

21.2

14.9

30.2

31.3

7.6

6.6

27.9

22.3

40.2

34.6

61.8

15.3

Median

19.8

12.7

29.6

29.8

6.5

5.8

27.8

21.1

36.7

32.9

23.7

14.9

Global cybersecurity

Cyberark

$2,645

323.2

23.5

18.8

23.8

24.3

7.0

5.9

29.3

24.2

49.9

42.6

130.1

17.0

FireEye

$3,350

826.9

10.1

7.3

12.2

13.5

3.9

3.6

31.9

26.9

711

107

N/A

N/A

Fortinet

$15,194

1783.3

19.3

14.3

24.4

25.7

7.7

6.7

31.5

26.1

54.0

46.6

206.3

15.9

F-Secure

€ 497

194.7

14.7

17.5

6.1

10.3

2.1

1.8

34.9

17.7

104

40.1

(56.5)

160.0

Imperva

$1,641

351.0

9.1

11.5

13.0

14.5

3.5

3.2

27.2

21.8

176

51.8

(185.7)

239.3

Qualys

$3,539

278.8

20.8

18.5

37.3

37.4

11.1

9.3

29.7

25.0

60.5

51.3

17.2

18.0

Secureworks

$1,106

519.3

11.0

9.4

N/A

1.9

2.0

1.9

N/A

97.5

N/A

N/A

N/A

N/A

Average

15.5

13.9

19.5

18.2

5.3

4.6

30.7

34.2

193

56.6

Median

14.7

14.3

18.4

14.5

3.9

3.6

30.6

25.0

82.4

48.9

Data management software

Barracuda Networks

$3,190

747.0

6.8

8.2

16.3

19.2

3.6

3.4

22.4

17.6

41.1

34.6

(905.4)

18.7

Commvault Systems

$2,597

332.0

26.8

21.5

13.6

16.3

7.3

6.0

53.3

36.7

212

100

(210.3)

111.8

Mimecast

$5,491

708.0

37.4

27.5

14.6

15.8

7.8

6.2

53.7

39.0

91.4

63.4

(153.8)

44.2

Proofpoint

$2,765

823.1

26.1

7.5

54.1

52.9

6.0

5.6

11.1

10.5

13.7

12.5

N/A

9.7

Average

24.3

16.2

24.6

26.0

6.2

5.3

35.1

25.9

89.5

52.6

Median

26.4

14.9

15.4

17.7

6.6

5.8

37.8

27.1

66.3

49.0

Source: Edison Investment Research, Bloomberg. Note: Prices at 26 September 2018.

Exhibit 5: Financial summary

£m

2015

2016

2017

2018

2019e

2020e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

15.0

21.2

26.9

27.5

30.1

33.2

Cost of Sales

(0.5)

(1.9)

(1.1)

(1.1)

(1.5)

(1.7)

Gross Profit

14.6

19.3

25.8

26.4

28.6

31.6

EBITDA

 

 

4.2

5.4

5.0

5.9

5.8

7.0

Normalised operating profit

 

 

4.0

4.6

3.2

3.3

2.8

3.6

Amortisation of acquired intangibles

(2.0)

(2.5)

(2.6)

(2.6)

(2.6)

(2.6)

Exceptionals

(2.5)

(2.7)

(2.6)

(1.4)

0.0

0.0

Share-based payments

(0.4)

(1.2)

(0.7)

0.3

(1.0)

(1.0)

Reported operating profit

(0.9)

(1.7)

(2.7)

(0.4)

(0.8)

(0.0)

Net Interest

(0.5)

(0.3)

(0.3)

(0.3)

(0.4)

(0.4)

Joint ventures & associates (post tax)

(0.7)

(0.2)

0.0

0.0

0.0

0.0

Exceptionals

(0.3)

(0.6)

1.1

0.3

(0.2)

0.0

Profit Before Tax (norm)

 

 

2.8

4.1

2.9

3.1

2.4

3.2

Profit Before Tax (reported)

 

 

(2.4)

(2.8)

(1.9)

(0.3)

(1.4)

(0.4)

Reported tax

(0.9)

(0.6)

(0.6)

0.1

0.1

0.0

Profit After Tax (norm)

1.9

3.2

2.1

3.0

1.9

2.5

Profit After Tax (reported)

(3.3)

(3.5)

(2.6)

(0.3)

(1.3)

(0.4)

Minority interests

0.3

(0.2)

(0.6)

(0.1)

(0.4)

(0.5)

Discontinued operations

8.4

(22.2)

(1.9)

0.7

0.0

0.0

Net income (normalised)

2.2

3.0

1.5

2.9

1.5

2.1

Net income (reported)

5.4

(25.9)

(5.0)

0.3

(1.7)

(0.8)

Basic average number of shares outstanding (m)

78

72

57

62

62

62

EPS - basic normalised (p)

 

 

2.84

4.16

2.65

4.63

2.39

3.34

EPS - diluted normalised (p)

 

 

2.84

4.16

2.65

4.61

2.38

3.33

EPS - basic reported (p)

 

 

6.97

(36.20)

(8.79)

0.55

(2.81)

(1.34)

Dividend (p)

5.00

2.00

0.70

0.00

0.00

0.00

Revenue growth (%)

41.2

27.0

2.1

9.5

10.4

Gross Margin (%)

96.9

91.1

95.9

96.1

95.0

95.0

EBITDA Margin (%)

28.3

25.4

18.4

21.3

19.2

21.2

Normalised Operating Margin

26.8

21.7

11.9

12.1

9.3

10.8

BALANCE SHEET

Fixed Assets

 

 

119.1

67.3

72.3

69.7

67.7

65.8

Intangible Assets

110.2

66.9

71.0

68.7

66.6

64.6

Tangible Assets

6.4

0.4

0.4

0.4

0.4

0.5

Investments & other

2.5

0.0

0.9

0.7

0.7

0.7

Current Assets

 

 

56.2

16.2

20.2

13.5

13.7

16.6

Stocks

9.5

0.1

0.1

0.1

0.1

0.1

Debtors

34.6

6.6

8.4

7.1

8.2

9.1

Cash & cash equivalents

12.1

4.8

11.6

6.2

5.3

7.3

Other

0.0

4.8

0.0

0.1

0.1

0.1

Current Liabilities

 

 

(43.2)

(22.5)

(17.9)

(12.2)

(11.4)

(12.3)

Creditors

(40.5)

(13.4)

(14.3)

(10.1)

(11.3)

(12.2)

Tax and social security

(0.6)

(2.3)

(1.5)

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

Other

(2.1)

(6.8)

(2.1)

(2.1)

(0.1)

(0.1)

Long Term Liabilities

 

 

(9.4)

(13.5)

(19.9)

(16.0)

(15.3)

(14.7)

Long term borrowings

(4.4)

(3.7)

(9.9)

(8.9)

(8.9)

(8.9)

Other long term liabilities

(5.0)

(9.8)

(9.9)

(7.1)

(6.3)

(5.8)

Net Assets

 

 

122.7

47.6

54.8

55.0

54.7

55.3

Minority interests

(0.2)

(0.5)

(1.0)

(0.9)

(1.3)

(1.8)

Shareholders' equity

 

 

122.4

47.1

53.8

54.1

53.4

53.5

CASH FLOW

Op Cash Flow before WC and tax

4.2

5.4

5.0

5.9

5.8

7.0

Working capital

0.8

0.9

(1.6)

(2.8)

0.1

0.0

Exceptional & other

2.8

(12.2)

(5.1)

(1.4)

0.0

0.0

Tax

(0.6)

(0.6)

(0.7)

(1.9)

(0.5)

(0.5)

Net operating cash flow

 

 

7.3

(6.6)

(2.5)

(0.2)

5.4

6.5

Capex

(1.8)

(2.5)

(3.4)

(2.7)

(3.6)

(4.2)

Acquisitions/disposals

(2.5)

(7.5)

(0.7)

(1.1)

(2.4)

0.0

Net interest

(0.4)

(0.2)

(0.3)

(0.3)

(0.4)

(0.4)

Equity financing

(3.6)

(50.7)

9.5

0.0

0.0

0.0

Dividends

(3.4)

(3.1)

(1.4)

(0.2)

0.0

0.0

Other

(6.5)

65.1

(0.4)

(0.2)

0.0

0.0

Net Cash Flow

(10.8)

(5.6)

0.84

(4.7)

(1.0)

2.0

Opening net debt/(cash)

 

 

(20.6)

(7.8)

(1.0)

(1.7)

2.7

3.7

FX

(1.9)

(1.2)

(0.1)

0.3

0.0

0.0

Other non-cash movements

(0.1)

0.0

(0.0)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(7.8)

(1.0)

(1.7)

2.7

3.7

1.7

Source: Company data, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Blancco Technology Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Blancco Technology Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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