Blur Group PLC Q2 2016 Quarterly Business Update (4560F)

TIDMBLUR

RNS Number : 4560F

Blur Group PLC

28 July 2016

blur Group plc

("blur Group", the "Group" or the "Company")

Q2 2016 Quarterly Business Update

blur Group plc (AIM:BLUR), the market-leading Enterprise Services Platform & Marketplace, today releases key metrics for Q2 2016, a period of continued progress across the Group's Enterprise customers reflected in EBITDA improvement, gross profit generation and further reductions in cash burn and operating costs.

Q2 2016 highlights:

-- blur's Enterprise strategy continues to drive improvements to EBITDA, gross profit, costs and cash

-- Higher margin revenues increased by 75% over Q1, driving a positive gross profit in the period

-- Third consecutive quarter of improved underlying cash burn - down by 28% to $1.1 million in Q2 2016 from $1.5 million in Q1 2016 (excluding Foreign Exchange movements and Q1's R&D tax credit receipt of $0.5 million)

-- Cash at the end of Q2 2016, including unrealised foreign exchange movements, was $4.3 million

-- Operating costs down 22% compared to Q1 2016 as the Enterprise strategy continues to drive further operational efficiencies

-- Reduction in project numbers largely offset by increases in average project kick off values resulting in broadly flat total value of kicked off projects comparing Q2 to Q1. Variations of project volumes and values are as typically seen in early stages of Enterprise relationships

   --      H1 2016 EBITDA in line with management expectations 
 
  ALL PROJECTS     Q2 2016    Q1 2016    CHANGE 
---------------  ---------  ---------  -------- 
                       No.        No.         % 
---------------  ---------  ---------  -------- 
  Pitching On           73         97     -24.7 
---------------  ---------  ---------  -------- 
  Kicked Off            73        101     -27.7 
---------------  ---------  ---------  -------- 
  Completed             54         80     -32.5 
---------------  ---------  ---------  -------- 
 
 
  ENTERPRISE PROJECTS ONLY**     Q2 2016    Q1 2016    CHANGE 
-----------------------------  ---------  ---------  -------- 
                                     No.        No.         % 
-----------------------------  ---------  ---------  -------- 
  Pitching On                         30         74     -59.5 
-----------------------------  ---------  ---------  -------- 
  Kicked Off                          30         76     -60.5 
-----------------------------  ---------  ---------  -------- 
  Completed                           38         42      -9.5 
-----------------------------  ---------  ---------  -------- 
 

**blur defines the Enterprise as a business with 50 or more employees

During Q2 2016, the Group continued with its strategic focus on securing high-quality, higher margin Enterprise customers, with a propensity for repeat business. blur continues to work closely with, among others, the following three Enterprise customers in Q2:

UK listed enterprise, aerospace engineering; blur is working with a large corporation on a pilot program that is planned for Q3 and Q4 2016. The pilot process will involve on-boarding a single division's indirect spend supplier base to blur's platform.

UK listed enterprise, multi-platform media; blur is working with a corporation on an initial pilot due to launch in Q3 2016. The pilot is focused on improving the effectiveness of the corporation's marketing spend.

UK listed enterprise, oil and gas; blur has been working with this large corporation for several quarters, with a pilot in process. blur aims to become the strategic supplier for indirect business services spend, initially focussed on the marketing function.

Financial update

blur's focus on larger, Enterprise accounts continues to drive improvements to EBITDA, gross profit, costs and cash.

The Group's higher margin revenues grew by 75% in Q2, over Q1. The three elements of the Group's higher margin revenues, Premium Services, Access Fees and Subscriptions, each increased, driving a gross profit for the quarter.

The Group's cash balance at the end of Q2 2016 totalled $4.3 million compared to $5.8 million at the end of Q1 2016.

As the Group is in the early phases of relationships with Enterprises, blur has seen variations in the volume and value of projects placed. In this period, the reduction in the numbers of projects kicked off and pitched on in Q2 was largely offset by an increase in the average project value meaning that the total value of kicked off projects fell by just 2%, compared to Q1 2016.

Cash collections performed well in Q2, reflecting the higher quality revenue generated from blur's Enterprise customers.

blur's reported cash balance has been impacted by $0.7 million of unrealised exchange losses in the last two quarters and $0.4 million of unrealised exchange losses in Q2 2016, as the valuation of blur's sterling denominated cash balances were affected by the Brexit-driven decline in the GBP:USD exchange rate at the end of June.

Excluding these exchange movements, and Q1's R&D tax credit receipt of $0.5 million, the cash burn for Q2 2016 was $1.1 million, 28% lower than Q1 2016.

blur's operating efficiency also continued to improve, driving a reduction in operating expenses of 22% in Q2, compared to Q1 2016 and by 41% compared to Q4 2015.

Philip Letts, blur Group CEO, commented:

"Q2 2016 has seen the Group further develop its Enterprise pipeline. We continue to work closely with several larger Enterprises, demonstrating that our unique end-to-end solution drives down their indirect business services spend.

"The current macro-economic uncertainty means that cash optimisation, driven by better cost control, is moving to the top of the corporate agenda. This was highlighted by Deloitte's recent Q2 2016 CFO survey, with reducing costs and increasing cash flow being the top two balance sheet priorities for the first time in more than a year. Whilst we don't expect these trends to have an immediate impact on blur's revenues, over time we do expect an increasing number of large Enterprises to prioritise reduction of their indirect spend.

"For several quarters, our strategy has been to focus on these large Enterprise customers. By doing this, blur has improved the quality of its revenues throughout the first half of 2016, leading to significant quarter on quarter improvements to EBITDA, gross profit, costs, collections and cash burn.

"While blur saw a reduction in project numbers in the quarter, the early phases of the Group's relationships with larger corporates is characterised by longer sales cycles, together with wider variations in the volumes and values of projects. In Q2 we saw an increase in the average value of projects kicked off, meaning our total value of kicked off projects was broadly unchanged from Q1.

"Engaging with high quality, higher margin, repeating Enterprise accounts remains blur's strategic focus and we are committed to becoming the indirect business services spend platform of choice for those customers. Achieving wider roll outs of our platform in these larger organisations is key to blur's path to sustainable profitability."

This announcement contains inside information.

For further information, please contact:

blur Group plc [e-mail]

Tim Allen Tel: [phone]

Shaun Dobson/Jen Boorer N+1 Singer

Tel: [phone]

Alistair de Kare-Silver Yellow Jersey PR

Tel: [phone]

About blur Group plc at blurgroup.com

Since 2010, blur Group has been helping enterprises worldwide eliminate waste and inefficiency in their indirect procurement process through its market leading Enterprise Services Platform & Marketplace. To date over 65,000 businesses, including companies like, Tesco, Danone, Trinity Mirror, and PwC, have adopted blur's platform to either buy or sell services online submitting over $500m of services requirements to blur Group's platform.

blur Group is a public company listed on the London Stock Exchange's AIM market (BLUR) and is headquartered in the UK with regional sales offices in the US and Europe.

This information is provided by RNS

The company news service from the London Stock Exchange

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July 28, 2016 02:02 ET (06:02 GMT)