Main menu
Edison Group
  • Home
  • Sparks
  • Equities

    Equities

    View All Equities

    Equities by Sector

    YXT.com

    MCap

    USD127m

    Last close

    USD23.43

    ▲ 20.23 (632.19%)

    Northern Data Group

    MCap

    EUR486m

    Last close

    EUR6.28

    ▲ −1.28 (−16.88%)

    Bodycote

    MCap

    GBP1,572m

    Last close

    GBP9.14

    ▲ −9.00 (−0.98%)

  • Sectors

    Sectors

  • Megatrends

    Megatrends

  • Thematics

    Thematics

    View All Thematics

    Latest

  • Audiovisual

    Audiovisual

    View All Audiovisual

    Latest

Blancco Technology Group — Clean slate

Blancco Technology Group — Clean slate

Blancco’s H118 results reflect the non-recurrence of one-off licence deals signed in H117 as well as a period of restructuring. Despite the weak H1, management has a sufficiently strong sales pipeline that it expects to meet previous guidance for FY18. The company is now in better shape for the soon to be appointed new CEO to drive sustainable, cash-generative revenue growth.

Written by

Katherine Thompson

Director

Blancco Technology Group

Clean slate

H118 results

Software & comp services

23 March 2018

Price

66.0p

Market cap

£42m

Net debt (£m) at end H118

3.4

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

(2.2)

(9.0)

(72.2)

Rel (local)

1.5

(1.3)

(71.2)

52-week high/low

239p

48p

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

FY18 trading update

July 2018

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Bridie Barrett

+44 (0)20 3077 5700

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

Blancco’s H118 results reflect the non-recurrence of one-off licence deals signed in H117 as well as a period of restructuring. Despite the weak H1, management has a sufficiently strong sales pipeline that it expects to meet previous guidance for FY18. The company is now in better shape for the soon to be appointed new CEO to drive sustainable, cash-generative revenue growth.

Year end

Revenue (£m)

Adj. operating profit* (£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

06/16

21.2

4.6

4.16

2.0

15.9

3.0

06/17**

26.9

3.2

2.60

0.7

25.4

1.1

06/18e

28.4

2.3

1.94

0.0

34.0

N/A

06/19e

31.4

3.1

2.73

0.0

24.2

N/A

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

H118 a period of restructuring

After restating financials to exclude the recently sold Mexican business, Blancco reported a 1.4% y-o-y decline in H118 revenues (flat in constant currency) and an adjusted operating profit margin of 6.6%. The company moved from a net cash position of £1.7m at end FY17 to a net debt position of £3.4m at the end of H118. During H118, management was focused on restructuring the headcount to reflect current revenue expectations, as well as putting in place strong financial and operational controls. This should result in a lower operating cost base from H218. Management also sought feedback from its customer base to shape its product and marketing strategies and has refined its target markets.

FY18 outlook unchanged

Despite a relatively weak H118 from a revenue perspective, the company expects to be able to meet the FY18 revenue growth and adjusted operating margin guidance it set in November, albeit from a slightly lower base now that the Mexican business has been excluded from FY17 results. We have revised our forecasts to reflect the removal of the Mexican business as well as the lowered operating cost base. Overall, our revenue forecasts are reduced by 3% in FY18 and FY19, while adjusted operating profit (AOP) is substantially unchanged in both years. A smaller minority interest deduction results in an increase in our normalised EPS forecasts of 44% in FY18 and 16% in FY19. We forecast net debt of £3.5m at the end of FY18, substantially unchanged from the H118 level.

Valuation: Reinvigorating sales is key to upside

On our new forecasts, Blancco is trading on a P/E multiple of 34.0x in FY18e and 24.2x in FY19e, which is at a discount to UK and global cybersecurity peers. Upside to the share price from this point will depend on the company demonstrating progress towards achieving at least the low end of revenue growth guidance, with a recovery in the end-of-life business a key factor in this. One-off licence deals could add materially to profitability.

Review of H118 results

This is the first reporting period since Blancco sold its 70% stake in the Mexico joint venture (completed in January 2018). The Mexican contribution has been reclassified into discontinued operations. The table below shows the results for H118 and the restated results for H117. H117 restated numbers also take into account the shift of revenues from H117 to H217, which overall has no impact on FY17 revenues. Pre-restatement, Mexico contributed revenues of £0.77m (2.8% of the total) and adjusted operating profit of £0.24m in FY17. Revenues declined marginally year-on-year, although on a constant currency basis were flat. Divisional adjusted operating profit (AOP) declined from a year ago as headcount increases in H217 took full effect in H118. Central costs were also higher, reflecting the changes to the management team. Exceptional costs included a £0.6m charge for restructuring and £0.6m in legal costs relating to the review of contracts signed in FY16 and FY17. The company moved from a net cash position of £1.7m at the end of FY17 to a net debt position of £3.4m at the end of H118. During the period, the company paid £0.7m for earnouts, as well as paying for exceptional costs relating to prior periods.

Exhibit 1: Half-yearly results highlights

£m

H118

H117 restated

y-o-y

Revenues

12.61

12.79

(1.4%)

Divisional adjusted operating profit

1.75

3.29

(46.9%)

Central costs

(0.92)

(0.81)

13.2%

Total adjusted operating profit

0.83

2.48

(66.6%)

Divisional adjusted operating margin

13.9%

25.8%

(11.9%)

Total adjusted operating margin

6.6%

19.4%

(12.8%)

Normalised net income - continuing only

0.44

1.54

(71.2%)

Reported net income - continuing only

(1.09)

(2.66)

(59.1%)

Normalised net income - total

0.48

0.75

(36.0%)

Reported net income - total

(1.08)

(5.09)

(78.7%)

Normalised basic EPS (p) - continuing only

0.72

2.75

(73.8%)

Normalised basic EPS (p) - total

0.78

1.34

(41.8%)

Reported basic EPS (p) - continuing only

(1.76)

(4.77)

(63.1%)

Reported basic EPS (p) - total

(1.75)

(9.13)

(80.8%)

Net debt

3.36

5.92

(43.2%)

Source: Blancco Technology Group

The table below shows progress with invoiced sales by product. End-of-life erasure declined year-on-year as a result of one-off deals in H117 that did not repeat in H118. Mobile erasure continued to show strong growth. Active erasure saw a small increase, although this is the smallest product line by revenue. Diagnostics invoiced sales declined as the end of some legacy contracts offset growth from new contract wins.

Exhibit 2: Half-yearly invoiced sales by product

Invoiced revenues (£m)

H118

H117 restated

Growth

Constant currency growth

End-of-life erasure

6.5

7.9

(17%)

(17%)

Mobile erasure

3.6

2.8

25%

29%

Active erasure

0.4

0.4

8%

9%

Professional services

0.6

0.9

(27%)

(24%)

Erasure total revenues

11.1

12.0

(7%)

(5%)

Diagnostics revenues

1.7

1.9

(14%)

(11%)

Total revenues

12.8

13.9

(8%)

(6%)

Source: Blancco Technology Group

Business update

Mexican subsidiary sold

In H217, Blancco increased its stake in the Mexico joint venture from 51% to 70%, but towards the end of H118 decided to sell its entire stake to the management of the JV. The disposal completed in January and Blancco should receive the proceeds of $0.5m/£0.4m by the end of FY18. The joint venture partner now has a distributor agreement in place and could yet generate revenues for Blancco in Latin America.

Restructuring the business

Management’s focus in H118 was on rebuilding the confidence and focus of the Blancco team, as well as putting in place solid financial and operational controls. During the period, the company sought feedback from existing customers to assess the direction of product development and marketing. As a result, the sales and operations teams were organised to focus on four key customer categories: IT Asset Disposition (ITAD), Mobile Processors, Mobile Retail and Enterprise Data Centres. Product development was focused on the company’s mobile offering, where Blancco is seeing good demand for a solution that combines diagnostics with erasure for use in the mobile resale market. Several products were released in H118 to support this functionality.

Sales activity

While there has been a net reduction in sales headcount, the company has strengthened the end-of-life (EOL) salesforce and expects EOL sales to normalise in H218. Keen to drive growth via the indirect sales channel, Blancco established 35 new partner channels in H118 and recently signed a distribution agreement with Ingram Micro. The company is seeing new opportunities in the enterprise data centre market, where it believes there should be good demand for both its EOL and active erasure software.

Management changes

The search for a permanent CEO is nearing completion and the company expects to be able to update the market shortly. During H118, Alan Bentley, who previously headed up the European sales effort, was appointed head of global sales.

Outlook and changes to forecasts

Management has maintained its full year guidance – for reported revenue growth of 6-16% and adjusted operating margin of 8-12%. In January, it confirmed that it expected revenues at the lower end of the range, with AOP and cash flow in line with guidance. We have revised our forecasts to reflect the removal of the Mexican contribution from continuing operations. We continue to forecast reported revenue growth at the bottom end of the revenue guidance range, with operating margins also at the bottom end of the range. This assumes that H218 revenues grow 25% h-o-h/12% y-o-y – this is supported by the recent signing of several enterprise deals as well as the strength of the pipeline.

Our AOP forecast is broadly unchanged as the removal of profits from the Mexican business is offset by lower operating costs post restructuring. We note that our normalised EPS forecast has increased in both years – this is due to a reduction in the minority interest deduction in both years. This partly reflects the exclusion of the Mexican business, but is also due to lower profitability generated by the remaining joint ventures in H118.

As we illustrated in our note post FY17 results (Rebasing the business, published in November 2017), one-off contracts could add materially to profitability – these are not factored into our forecasts.

Exhibit 3: Changes to forecasts

£m

FY18e

FY19e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

29.4

28.4

(3.2%)

5.6%

32.2

31.4

(2.7%)

10.4%

Gross profit

27.3

27.1

(0.7%)

5.2%

30.0

29.8

(0.6%)

9.9%

Gross margin

93.0%

95.4%

2.4%

(0.4%)

93.0%

95.0%

2.0%

(0.4%)

EBITDA

4.2

4.8

13.3%

(4.5%)

5.8

6.3

9.9%

31.4%

EBITDA margin

14.5%

16.9%

2.5%

(1.8%)

17.9%

20.2%

2.3%

3.2%

Normalised operating profit

2.3

2.3

(1.5%)

(27.6%)

3.2

3.1

(1.0%)

35.2%

Normalised operating profit margin

8.0%

8.1%

0.1%

(3.7%)

9.8%

10.0%

0.2%

1.8%

Reported operating profit

(1.1)

(0.9)

(17.8%)

(63.1%)

(0.3)

(0.4)

9.7%

(61.0%)

Reported operating margin

-3.9%

-3.3%

0.6%

6.2%

-1.0%

-1.2%

(0.1%)

2.1%

Normalised PBT

2.0

2.0

3.2%

(30.1%)

2.8

2.7

(1.2%)

35.9%

Reported PBT

(1.8)

(1.3)

(29.7%)

(30.1%)

(0.9)

(0.9)

9.5%

(24.6%)

Normalised net income

0.8

1.2

43.7%

(18.7%)

1.4

1.7

16.3%

40.9%

Reported net income

(3.3)

(1.6)

(51.0%)

(67.2%)

(2.3)

(1.5)

(35.3%)

(4.8%)

Normalised basic EPS (p)

1.3

1.9

43.7%

(25.4%)

2.3

2.7

16.3%

40.9%

Normalised diluted EPS (p)

1.3

1.9

43.7%

(25.4%)

2.3

2.7

16.3%

40.9%

Reported basic EPS (p)

(5.3)

(2.6)

(51.0%)

(69.9%)

(3.8)

(2.5)

(35.3%)

(4.8%)

Dividend per share (p)

0.0

0.0

N/A

N/A

0.0

0.0

N/A

N/A

Net debt

0.9

3.5

(285.0%)

N/A

1.6

2.9

79.8%

(16.9%)

Source: Edison Investment Research


Exhibit 4: Financial summary

£m

2015

2016

2017

2018e

2019e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

15.0

21.2

26.9

28.4

31.4

Cost of Sales

(0.5)

(1.9)

(1.1)

(1.3)

(1.6)

Gross Profit

14.6

19.3

25.8

27.1

29.8

EBITDA

 

 

4.2

5.4

5.0

4.8

6.3

Normalised operating profit

 

 

4.0

4.6

3.2

2.3

3.1

Amortisation of acquired intangibles

(2.0)

(2.5)

(2.5)

(2.5)

(2.5)

Exceptionals

(2.5)

(2.7)

(2.6)

(1.2)

0.0

Share-based payments

(0.4)

(1.2)

(0.7)

0.4

(1.0)

Reported operating profit

(0.9)

(1.7)

(2.6)

(0.9)

(0.4)

Net Interest

(0.5)

(0.3)

(0.3)

(0.3)

(0.4)

Joint ventures & associates (post tax)

(0.7)

(0.2)

0.0

0.0

0.0

Exceptionals

(0.3)

(0.6)

1.1

(0.0)

(0.2)

Profit Before Tax (norm)

 

 

2.8

4.1

2.9

2.0

2.7

Profit Before Tax (reported)

 

 

(2.4)

(2.8)

(1.8)

(1.3)

(0.9)

Reported tax

(0.9)

(0.6)

(0.7)

(0.1)

(0.1)

Profit After Tax (norm)

1.9

3.2

2.0

1.5

2.1

Profit After Tax (reported)

(3.3)

(3.5)

(2.5)

(1.3)

(1.1)

Minority interests

0.3

(0.2)

(0.6)

(0.3)

(0.4)

Discontinued operations

8.4

(22.2)

(1.9)

0.0

0.0

Net income (normalised)

2.2

3.0

1.5

1.2

1.7

Net income (reported)

5.4

(25.9)

(4.9)

(1.6)

(1.5)

Basic average number of shares outstanding (m)

78

72

57

62

62

EPS - basic normalised (p)

 

 

2.84

4.16

2.60

1.94

2.73

EPS - diluted normalised (p)

 

 

2.84

4.16

2.60

1.94

2.73

EPS - basic reported (p)

 

 

6.97

(36.20)

(8.59)

(2.59)

(2.46)

Dividend (p)

5.00

2.00

0.70

0.00

0.00

Revenue growth (%)

41.2

27.0

5.6

10.4

Gross Margin (%)

96.9

91.1

95.9

95.4

95.0

EBITDA Margin (%)

28.3

25.4

18.7

16.9

20.2

Normalised Operating Margin

26.8

21.7

11.9

8.1

10.0

BALANCE SHEET

Fixed Assets

 

 

119.1

67.3

66.6

64.9

62.5

Intangible Assets

110.2

66.9

66.2

64.4

62.0

Tangible Assets

6.4

0.4

0.4

0.5

0.6

Investments & other

2.5

0.0

0.0

0.0

0.0

Current Assets

 

 

56.2

16.2

20.2

14.9

16.5

Stocks

9.5

0.1

0.1

0.1

0.2

Debtors

34.6

6.6

8.4

9.3

10.3

Cash & cash equivalents

12.1

4.8

11.6

5.4

6.0

Other

0.0

4.8

0.0

0.0

0.0

Current Liabilities

 

 

(43.2)

(22.5)

(17.5)

(16.6)

(16.0)

Creditors

(40.5)

(13.4)

(14.0)

(12.1)

(13.7)

Tax and social security

(0.6)

(2.3)

(1.5)

(1.5)

(1.5)

Short term borrowings

0.0

0.0

0.0

0.0

0.0

Other

(2.1)

(6.8)

(2.1)

(3.1)

(0.8)

Long Term Liabilities

 

 

(9.4)

(13.5)

(18.7)

(14.0)

(14.0)

Long term borrowings

(4.4)

(3.7)

(9.9)

(8.9)

(8.9)

Other long term liabilities

(5.0)

(9.8)

(8.7)

(5.1)

(5.1)

Net Assets

 

 

122.7

47.6

50.6

49.1

49.1

Minority interests

(0.2)

(0.5)

(1.0)

(1.1)

(1.5)

Shareholders' equity

 

 

122.4

47.1

49.6

48.1

47.5

CASH FLOW

Op Cash Flow before WC and tax

4.2

5.4

5.0

4.8

6.3

Working capital

0.8

0.9

(1.6)

(1.9)

0.6

Exceptional & other

2.8

(12.2)

(5.1)

(1.2)

0.0

Tax

(0.6)

(0.6)

(0.7)

(1.3)

(0.1)

Net operating cash flow

 

 

7.3

(6.6)

(2.5)

0.4

6.8

Capex

(1.8)

(2.5)

(3.4)

(3.3)

(3.4)

Acquisitions/disposals

(2.5)

(7.5)

(0.7)

(1.1)

(2.5)

Net interest

(0.4)

(0.2)

(0.3)

(0.3)

(0.4)

Equity financing

(3.6)

(50.7)

9.5

0.0

0.0

Dividends

(3.4)

(3.1)

(1.4)

(0.2)

0.0

Other

(6.5)

65.1

(0.4)

(0.8)

0.0

Net Cash Flow

(10.8)

(5.6)

0.84

(5.2)

0.6

Opening net debt/(cash)

 

 

(20.6)

(7.8)

(1.0)

(1.7)

3.5

FX

(1.9)

(1.2)

(0.1)

0.0

0.0

Other non-cash movements

(0.1)

0.0

(0.0)

0.0

0.0

Closing net debt/(cash)

 

 

(7.8)

(1.0)

(1.7)

3.5

2.9

Source: Blancco Technology Group, 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 Limited (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 Limited (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

Research: Healthcare

Transgene — 2018: A year of clinical data

We anticipate nine of Transgene’s ongoing clinical trials to read out data later this year. This will be the first major test of the company’s strategy for combining its products with approved therapies. In our view, data packages from two trials testing the combination of TG4010 and Opdivo in advanced first- and second-line NSCLC will be key inflection points. Cash as of FY17 results will be sufficient to fund operations into 2019. We value Transgene at €236m (€3.8/share) vs €207m (€3.7/share) previously.

Continue Reading
Cookie Policy Overview
Edison Group

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping us understand which section of the website you find more interesting and useful. See our Cookie Policy for more information.

Strictly necessary and functional

These cookies are used to deliver our website and content. Strictly necessary cookies relate to our hosting environment, and functional cookies are used to facilitate social logins, social sharing and rich-media content embeds.

Advertising

Advertising Cookies collect information about your browsing habits such as the pages you visit and links you follow. These audience insights are used to make our website more relevant.

Performance

Performance Cookies collect anonymous information designed to help us improve the site and respond to the needs of our audiences. We use this information to make our site faster, more relevant and improve the navigation for all users.