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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Regenersis | LSE:RGS | London | Ordinary Share | GB00B06GNN57 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 229.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMRGS
RNS Number : 3120R
Regenersis PLC
08 March 2016
8 March 2016
REGENERSIS PLC
("Regenersis", the "Company" or the "Group")
HALF YEARLY RESULTS
Regenersis is pleased to announce its half yearly results for the six months to 31 December 2015. As announced on 5 February 2016, Regenersis has conditionally agreed a sale of its Repair Services Business, in order to focus on growing its software data erasure business Blancco, and intends to distribute surplus capital to shareholders.
Blancco is the global market leader in data erasure software, enabling the full range of private and public sector organisations to achieve their security and compliance goals. Blancco enables permanent, auditable data erasure across the widest available range of devices and occasions.
Financial and operational highlights relating to Blancco
-- Revenue of GBP9.9 million (H1 2015: GBP6.8 million), an increase of 46% in sterling terms and 51% on constant currency basis.
-- Headline Operating Profit of GBP3.5 million before Corporate Costs (H1 2015: GBP1.9 million), an increase of 84% in sterling terms and 100% on constant currency basis.
-- Headline Operating Profit margin of 35.4% (H1 2015: 27.9%), an increase of 750 basis points.
-- Strong growth in the strategically important North American region, with invoiced sales growing in constant currency by 95%.
-- Acquisition of Tabernus, which further enhances the Group's market footprint both geographically, through its strong position in the US market, and through the addition of new product lines to the Group's portfolio.
-- Successful launch of integrated data erasure and mobile diagnostics solutions, incorporating Xcaliber diagnostics technology.
Financial and operational highlights relating to the Group
-- Headline Operating Cash Flow of GBP3.2 million (H1 2015: GBP2.0 million), an increase of 60%.
-- Cash conversion of 119% (H1 2015: 154%), reflecting the impact of IFRS conversion -- Continuing adjusted earnings per share of 2.43 pence (H1 2015: 0.63 pence)
-- Group net debt at period end of GBP8.9 million (FY15: net cash of GBP7.8 million) reflecting the acquisition of Tabernus, and costs relating to the disposal of the Repair Services business.
-- Interim dividend of 0.66 pence per ordinary share (H1 2015: 1.65 pence per share), rebased in the context of the disposal of the Repair Services business and associated capital distribution. The Board intends to adopt a progressive dividend policy moving forwards.
-- Expected distribution of up to GBP50 million by way of a tender offer following completion of the Repair Services disposal
-- Continued discussions with a number of parties in relation to a possible sale of Digital Care.
Matthew Peacock, Executive Chairman of Regenersis, said:
"Blancco has again demonstrated its ability to grow sales at a rapid pace while maintaining strong profit margins and cash flow, testament to the efforts of the Blancco team, and the value of holding a unique competitive position in an exciting growth sector. In the coming weeks, I look forward to completing the Group's transformation into a very exciting software opportunity, unique in the UK publicly quoted market."
Unless otherwise stated, defined terms used in this announcement have the meanings as given to them in the glossary at the end of this announcement
Enquiries:
Regenersis Plc +44 (0) 20 3657 7000
Matthew Peacock, Executive Chairman
Jog Dhody, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0) 20 7418 8900
Richard Kauffer
Euan Brown
Panmure Gordon (UK) Limited (Joint Broker) +44 (0) 20 7886 2500
Dominic Morley, Corporate Finance
Charles Leigh Pemberton, Corporate Broking
Tulchan Communications +44 (0) 20 7353 4200
Tom Murray
www.regenersis.com
www.blancco.com
EXECUTIVE CHAIRMAN'S STATEMENT
I am pleased to report Regenersis' half yearly results for the six-month period to 31 December 2015.
Group focus over H1 2016 has been on establishing the Group as a pure-play software business focused on Blancco - the global market leader in data erasure software.
Blancco has identified a $2 billion market opportunity in end-of-life device erasure in the Enterprise and Public Sectors. Blancco is monetising this market for the first time, replacing a patchwork of approaches to data sanitisation characterised by incomplete coverage of devices, ineffective erasure methods, lack of measurement and auditability, standalone systems and workflows, and frequent physical destruction of valuable assets.
Additionally, we believe that Blancco has a large, as yet unquantified, Live Environment Erasure (LEE) market opportunity. Blancco's historic focus has been on the total erasure of devices at the end of their enterprise life, whereas LEE delivers selective erasure of data residing in virtualised storage environments and clouds. LEE supports recurring processes such as sanitisation of cloud storage space between different users or clients, or implementing the "destroy" step of an enterprise data lifecycle management policy.
In both areas, our growth is driven by a rising tide of security awareness and data protection legislation.
In the last year Blancco strengthened our leading position in the data erasure industry in three important ways. Firstly, we built our presence in the heartland of the IT industry, the US, with the relocation of our headquarters to Atlanta and with the acquisition and integration of the US market leader, Tabernus. Scale in this geography is critical for us in terms of access to customers and partners in the broader IT sector. Secondly, we enhanced our technology leadership with awards of industry-first patents for SSD (solid state drive) erasure, and with the successful launch of our integrated Mobile erasure-and-diagnostics solution incorporating Xcaliber technology. Finally, we saw very rapid growth in sales of our unique Live Environment Erasure products.
Results
As announced on 5 February 2016, Regenersis has agreed to sell its Repair Services Business to CTDI Repair Services Limited for a cash consideration of EUR103.5 million. In order to maximise shareholder value, the Group has also decided to market separately its Digital Care business to other interested purchasers. These businesses are both reported under discontinued operations.
The continuing businesses of the Group include Blancco (data erasure) plus the Group's 49% minority stake in Xcaliber Technologies (mobile diagnostics), which is not consolidated below.
Consolidated revenue for the continuing businesses of the Group in the period was GBP9.9 million (H1 2015: GBP6.8 million). Headline Operating Profit before Corporate Costs was GBP3.5 million (H1 2015: GBP1.9 million). After Corporate Costs, Headline Operating Profit was GBP2.7 million (H1 2015: GBP1.3 million). Adjusted earnings per share were 2.43p (H1 2015: 0.63p). Further details of these results are contained in the Group Financial Review.
In the half-year period just ended the Group had PLC corporate operating costs, excluding exceptional costs, of GBP2.6 million. These costs are incurred at PLC level and arise from the requirement to maintain an AIM listing and central management functions. Following the Repair Services and Digital Care disposals these functions will reduce and the ongoing central cost base is expected to be approximately GBP0.75 million per half year, or GBP1.5 million per annum.
Trading
Revenue
Blancco's revenue increased by 46% to GBP9.9 million (H1 2015: GBP6.8 million). On a constant currency basis revenue increased by 51%, with the majority of revenue generated in currencies depreciating versus Sterling in the period.
As noted at the time, both Revenue and Headline Operating Profit in H1 2015 were suppressed by the impact of transition to IFRS accounting for subscription sales. Underlying trends in business generation are shown below under Invoiced Sales.
Gross profit margin
Blancco's gross profit margin was 89% (H1 2015: 91%). The slight reduction was driven primarily by white-label sales of Xcaliber smartphone diagnostic technology as part of Blancco's integrated mobile erasure-and-diagnostics solution, with an associated cost of goods sold.
Headline Operating Profit ("HOP")
Blancco divisional HOP was GBP3.5 million (H1 2015: GBP1.9 million), an increase of 84%. Blancco's HOP margin expanded to 35.4% (H1 2015: 27.9%). These increases were largely driven by operating leverage, with a high fraction of incremental sales dropping through to the HOP line.
Blancco has continued to invest in its organisation and operations, in particular with several senior management appointments since H1 2015 to drive further sustainable growth. Blancco's overhead (sales, general and administration) costs were GBP5.3 million (H1 2015: GBP4.3 million), an increase of 23%. Continued expansion of the Blancco organisation is planned over the next 12 months across the full range of business functions.
Cash flow
Headline Operating Cash Flow for continuing operations was GBP3.2 million (H1 2015: GBP4.2 million), a decrease of 24%, due to the removal of discontinued cash flows in the current period. On a like for like basis, Headline Operating Cash Flow increased by 60% as a result of the growth in sales.
Cash conversion from Headline Operating Profit to Headline Operating Cash Flow was 119% (H1 2015: 154% on a like for like basis), which is above 100% due to cash generally being collected in advance of recognition of revenue. Cash conversion in H1 2015 was impacted by the mix of subscription sales in the period, which suppressed Headline Operating Profit relative to cash flow.
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In the period, GBP0.9 million of exceptional M&A costs were incurred principally on the acquisition of Tabernus (H1 2015: GBP1.3 million).
Capital expenditure by Blancco was GBP1.0 million (H1 2015: GBP0.7 million), an increase of 43%, relating mainly to the ongoing development of the Blancco product portfolio.
Operating KPIs: Invoiced Sales
In order to provide investors with a clear view of underlying business growth, Blancco will in future report a set of Invoiced Sales KPIs.
Blancco has two main pricing models, volume-based pricing, where clients purchase erasure licenses, and subscription pricing, where clients purchase a time-bound right of use of Blancco products. From a commercial and cash flow point of view there is little difference between these two models, but from a revenue perspective, absent of any other significant deliverables, volume-based sales are recognised at the point of invoice, whereas subscription sales are recognised monthly over the term of the subscription (even if the subscription is invoiced as an up-front payment). The Invoiced Sales measure recognises both volume-based and subscription business in the same way, at the point of invoice, and is the main internal management measure of sales performance.
As well as reporting Invoiced Sales KPIs in GBP and EUR, we have also reported them in constant currency, which we believe provides the most meaningful measure of underlying performance.
Invoiced Sales
Hot Features
Premium
H1 H1 2015 Growth Growth
2016
GBP'm GBP'm GBP'm CC*
-------------------------- ------ -------- ------- -------
Live Environment Erasure 0.9 0.2 350% 350%
Mobile 1.8 1.2 50% 50%
IT and other 7.9 6.4 23% 28%
Total 10.6 7.8 36% 40%
North America 3.9 2.0 95% 95%
Europe 3.9 3.9 0% 8%
Asia and ROW 2.8 1.9 47% 47%
Total 10.6 7.8 36% 40%
* At constant currency exchange rates, calculated by applying average exchange rates from H1 2015 to local currency sales in H1 2016, because exchange rate fluctuations can have a significant impact on growth rates measured in a single currency such as GBP or EUR.
The difference between the Invoiced Sales above and the reported sales represents the net deferral for the period. The Invoiced Sales can be reconciled to reported sales as follows:
H1 2016 H1 2015
GBP'm GBP'm
-------------------------------------- -------- --------
Invoiced Sales 10.6 7.8
Net revenue deferral of subscription
sales (0.7) (1.0)
Reported revenue 9.9 6.8
In H1 2016, Blancco's Invoiced Sales in Constant Currency increased by 40% versus H1 2015.
We experienced exceptionally strong growth in Live Environment Erasure products (primarily Blancco LUN, Blancco Virtual Machine, Blancco File - sold by Blancco under licence prior to the acquisition of SafeIT in September 2014), which grew Invoiced Sales to GBP0.9 million (an increase in Constant Currency of 350%). LEE products are used by organisations on a regular basis in their networked storage environments, whereas Blancco's other products are used primarily at the point of exit of a device from an organisation. We see two main factors driving growth: firstly, a strong client interest in the technology; and secondly, full integration of the former SafeIT business into Blancco enabling a step up in marketing and sales performance.
We also experienced very strong growth in Mobile products which grew Invoiced Sales to GBP1.8 million (an increase in Constant Currency of 50%). This growth has been driven by both the new in-house developed Mobile erasure product launched in December 2014, and by the new mobile diagnostics product launched in July 2015, incorporating Xcaliber technology. Blancco now provides a unique integrated diagnostics-and-erasure proposition for clients preparing high volumes of smartphones for resale.
We experienced strong growth in IT products and services, which grew Invoiced Sales to GBP7.9 million (an increase in Constant Currency of 28%). In this category Blancco supports erasure of a wide range of IT equipment including PCs, laptops, servers, and loose drives.
Geographically, sales growth was strongest in North America, which grew Invoiced Sales to GBP3.9 million (an increase in Constant Currency of 95%). North America benefited from significant investment in new management and sales personnel, from strong LEE sales, and from the acquisition of Tabernus.
Europe grew Invoiced Sales to GBP3.9 million (an increase in Constant Currency of 8%). Europe sales have been relatively weaker in new categories of Mobile and LEE than in the other geographies. Relative weakness in growth in Europe compared to other geographies also reflects significant changes in personnel, roles and focus associated with the transition from Finnish to American leadership and headquarters. Increasing growth in Europe, specifically the new product categories, is an important management focus going forward.
Asia and Rest of World grew Invoiced Sales to GBP2.8 million (an increase in Constant Currency of 47%). The majority of sales in this category are in Japan, where Mobile sales growth was particularly strong and Blancco made its first large scale deployment of the integrated mobile erasure-and-diagnostics solution.
Other operating KPIs
Blancco has implemented three new additional KPIs to monitor its success in retaining, expanding and monetising its client relationships.
Trailing 12 month Client Retention Rate at end December 2015 was 88% (December 2014: 77%). This metric measures the proportion of clients from the prior 12 month period (here: calendar year 2014) who purchased again from Blancco in the last 12 months (here: calendar year 2015). While the retention rate is high, we believe there is room for improvement here and initiatives to redesign and improve client support processes were undertaken in H1 2016, with encouraging initial feedback from clients.
Trailing 12 month Invoiced Sales Repeat Rate at end December 2015, on a constant currency basis, was 126% (December 2014: 94%). This metric takes our Invoiced Sales in the prior 12 month period (here: calendar year 2014) and compares Invoiced Sales from the same group of clients in the last 12 months (here: calendar year 2015), providing a measure of the observed rate of recurrence and expansion of Blancco sales from one period to the next. Blancco has continued to benefit from good growth in volumes within its installed base of clients, and significant large sales in December caused this metric to rise above its trend level.
Trailing 12 month Average Revenue Per Client at end December 2015 was GBP47,960 (December 2014: GBP43,154), an increase of 11.1%. However on a constant currency basis, this metric increased by 23.3%.
These metrics are all measured on a base of clients with Invoiced Sales over EUR10,000 per annum, which covers 88% of Blancco's trailing 12 month Invoiced Sales.
Technology and Development update
Blancco's unique proposition
The Blancco proposition is unique in a number of ways that broaden our scope in the market:
1) Permanent - Blancco provides fully-permanent data erasure, whereby data becomes irretrievable following the erasure process. We have one of the broadest sets of certifications and approvals for our solution, including those from the US and Swedish militaries.
2) Auditable - It is important that our clients have an audit trail to prove that erasure has taken place from an IT security perspective. Blancco provides digitally-signed, tamper proof erasure certificates which come from a central management console and tell clients exactly which hard drive was erased and when.
3) Centrally-managed - Many of our customers are global businesses and therefore need one centrally-managed system that works across all geographies. Our solution is run from a centrally-managed console and stretches from device to data centre - a critical hygiene requirement to sell to demanding enterprise customers.
4) Non-destructive - Blancco does not physically destroy any asset values in the data erasure process. Instead, our solution realises value as organisations are able to reuse or sell surplus equipment.
5) Live Environment & End of Life - There is an increasing shift from device lifecycle management to data lifecycle management. Our solution has the additional ability to track data throughout its lifecycle and destroy it throughout.
Legislative drivers
Legislation and regulatory change is driving the need for digital data destruction globally. The EU Global Data Protection Regulation (GDPR) and the "Right to be forgotten" is calling for data erasure in a number of ways and reaches beyond Europe to North America and APAC. The International Organisation for Standardisation (ISO) standards ISO 27001, 27018 and 27040 include specific call-outs for the erasure of digital data for the protection of customers. We are also seeing spot regulation within specific industries, including banking and finance, the Payment Card Industry (PCI), federal government and healthcare.
Blancco development update
Blancco focused in the first half of the year on a range of development projects across its product portfolio. Notable activities included the integration of Tabernus' product suite and development team, and the integration of Xcaliber diagnostic technology into Blancco's mobile erasure product.
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At December 2015, Blancco has a US patent pending for its SSD erasure technology, which follows on from the award of a European patent in July 2015. This patent addresses the problem of reliably erasing a very wide range of different OEM SSDs, which generally block hardware access and store redundant copies of data in unaddressable locations . This patent positions Blancco at the forefront of the rapidly-growing SSD erasure market and will oblige competitors entering this space to find a different method for reliable pan-OEM SSD erasure, which may prove difficult or even impossible.
While the growth trends in the business are strong, Blancco needs to continually evolve its product set and go-to-market approach to keep abreast of market and technology trends. Emerging priorities include partnership with a broader range of enterprise software and service providers, who control numerous erasure occasions or opportunities as part of the wider scope they deliver, and access to new categories of erasure, especially erasure in the live network environment, and erasure of the very broad spectrum of devices which comprise the 'Internet of Things'. I expect to update on strategy further with the year end results in September.
Acquisition of Tabernus
In September 2015, Regenersis acquired 100% of the share capital of Tabernus LLC and Tabernus Europe Limited, a privately owned provider of software erasure. With the majority of its revenue in the USA, Tabernus is the USA market leader. The consideration was $12 million (GBP7.6 million) comprising cash payment of $10 million (GBP6.6 million) funded through the Group revolver facility and $2 million (GBP1.3 million) in deferred cash consideration payable after three years.
The acquisition of Tabernus has boosted Blancco in the key US market, where Tabernus had larger sales than Blancco and a strong local management team. The Tabernus business has been fully integrated into Blancco and several former Tabernus people have taken on key leadership roles in the combined organisation. Tabernus also brings a set of hardware-based erasure products deployed for high-volume erasure in large data centres, filling a gap in Blancco's previous product portfolio.
Repair Services Disposal
The repair services disposal is expected to complete during the second quarter of the calendar year conditional on competition clearance being provided in Germany, Poland and Russia, and will include deal costs and settlement of contingent liabilities of approximately GBP7.8 million. Some of these have been incurred already during H1 in preparing the business for sale.
Following completion, the Group expects to return a significant portion of the net sales proceeds to shareholders, expected to be around GBP50 million.
The financial results for this business and the comparative results for prior periods are presented as discontinued operations.
Digital Care Disposal
We continue to have encouraging discussions with a number of parties in relation to a possible sale of Digital Care. We will provide shareholders with a further update as and when appropriate.
This business is also presented as discontinued in our financial statements.
Xcaliber Technology
Xcaliber, in which the group holds a 49% stake, is not consolidated by the group. The results are included within loss from equity accounted investments.
In H1 2016, Xcaliber has built on its first contracts won in the previous years, and is now generating a revenue stream with a number of key strategic customers, based on trial or pilot schemes which are expected to grow over the coming months and help turn the business to profitability.
The new business with a major US carrier won in the previous financial year has increased in value over the current year. This business provides a key strategic footprint in the US market for the SmartChk product which was previously not known in the marketplace. It is anticipated that this initial business will lead to further significant wins over the next 18 months.
Dividend
The Board is pleased to announce an interim dividend of 0.66 pence per ordinary share. This will be paid on 17 June 2016 to shareholders on the register on 13 May 2016. The ex-dividend date will be 12 May 2016
The Board intends to adopt a progressive dividend policy which reflects the long term earnings and cash flow potential of the group. The full year dividend will be split approximately 1/3 interim dividend and 2/3 final dividend, subject to the retention of funds needed to fund the future growth of the Group's business and its strategic aims.
Conclusions and outlook
Blancco performed strongly in the first half across its financial and operating KPIs. It additionally saw growth in the right places - its new product areas, especially LEE, and in the strategically important North American market. Based on a strong first half performance and continued strong growth trends at the beginning of the second half, the board anticipates a full year result in line with market expectations.
Matthew Peacock
Executive Chairman
GROUP FINANCIAL REVIEW
KPIs
6 months 6 months Year Commentary
ended ended ended
Key financials 31-Dec-15 31-Dec-14 30-Jun-15
----------------------
Invoiced Sales
is the measure
of business
generated in
the period,
prior to any
Invoiced Sales IFRS deferral
(GBP'm) 10.6 7.8 15.5 of revenues.
---------------------- ---------- ---------- ---------- ------------------------
Geography
---------------------- ---------- ---------- ---------- ------------------------
North America
is a strategically
important location
for the Group
and focus is
on growing our
presence in
North America 37% 26% 25% this location
------------------------
Europe 37% 50% 49%
------------------------
Asia and ROW 26% 24% 26%
---------------------- ---------- ---------- ---------- ------------------------
Product type
---------------------- ---------- ---------- ---------- ------------------------
The Group is
expanding its
product range
through the
acquisition
and development
of new services,
most notably
LEE (through
LEE 8% 3% 5% SafeIT).
------------------------
Mobile 17% 15% 16%
------------------------
IT and Other 75% 82% 79%
---------------------- ---------- ---------- ---------- ------------------------
While retention
rate is high,
further initiatives
Trailing 12 month to improve client
client retention support processes
rate* 88% 77% 81% are underway.
---------------------- ---------- ---------- ---------- ------------------------
The group continues
to benefit from
good growth
Trailing 12 month in volumes within
sales repeat its installed
rate* 126% 94% 103% base of clients.
---------------------- ---------- ---------- ---------- ------------------------
The average
spend per client
is increasing
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over time as
we add a greater
range of products
Average annual and more sophisticated
spend per customer* technology to
(GBP'000) 48.0 43.2 44.1 our portfolio
---------------------- ---------- ---------- ---------- ------------------------
Headcount
---------------------- ---------- ---------- ---------- ------------------------
The majority
of the workforce
work in sales,
to generate
new business
and revenue
growth. This
is underpinned
by a strong
technical R&D
team who work
on new product
development
and relationship
Admin 19 21 24 management
------------------------
R&D 34 30 30
------------------------
Sales 92 80 81
---------------------- ---------- ---------- ---------- ------------------------
* for customers spending over EUR10k per year
Segmental Results
6 months 6 months Year
ended ended ended
31-Dec-15 31-Dec-14 30-Jun-15
GBP'million GBP'million GBP'million
--------------------------------- ------------ ------------ ------------
Revenue - continuing operations
Software 9.9 6.8 15.0
Revenue - discontinued
operations
Aftermarket Services 99.9 95.1 187.6
Total 109.8 101.9 202.6
--------------------------------- ------------ ------------ ------------
Headline Operating Profit
- continuing operations
Software 3.5 1.9 5.4
Headline Operating Profit
- discontinued operations
Aftermarket Services 6.6 6.7 15.2
Headline Operating Profit
before Corporate Costs 10.1 8.6 20.6
Corporate Costs (continuing
operations) (0.8) (0.6) (1.4)
Corporate Costs (discontinued
operations) (1.8) (2.0) (3.8)
--------------------------------- ------------ ------------ ------------
Total 7.5 6.0 15.4
--------------------------------- ------------ ------------ ------------
Group Headline Operating
Profit - continuing operations 2.7 1.3 4.0
Group Headline Operating
Profit - discontinued
operations 4.8 4.7 11.4
--------------------------------- ------------ ------------ ------------
Total 7.5 6.0 15.4
--------------------------------- ------------ ------------ ------------
Software (continuing operations)
The Software segment includes Blancco, the global market leader in data erasure software and Xcaliber Technologies, a smartphone diagnostics software business. The Group holds a 49% stake in Xcaliber Technologies and it is currently not consolidated. SafeIT, acquired in September 2014, and Tabernus, acquired in September 2015, have been fully integrated into Blancco.
Financial and operational highlights included:
-- Acquisition of Tabernus, which further enhances the Group's market footprint both geographically, through its strong position in the US market, and through the addition of new product lines to the Group's portfolio.
-- A new distribution agreement signed in the United Arab Emirates, opening new sales channels to the technology centre of the Middle East.
-- Strong growth in the Live Environment Erasure product sales, which represents a more sophisticated erasure method in customers' networked storage environments, allowing real time and "live" data erasure in addition to the end of life erasure offered by the business' existing product range.
-- For the first time in this period, sales of integrated data erasure and mobile diagnostics solutions, integrating Xcaliber diagnostics technology into the Blancco Mobile erasure product.
-- Growth in Invoiced Sales under constant currency of 40%, representing amounts billed to clients in the period.
-- Strong growth in the strategically important North American region, with Invoiced Sales growing in constant currency by 95%. This is expected to further benefit from the addition of the Tabernus US business.
-- European patent for our SSD erasure method was granted in July 2015, plus a US patent for the same technology is currently pending.
Impact of revenue recognition
Under the Group's accounting policy and in compliance with International Financial Reporting Standards (IFRS), we are required to convert Invoiced Sales of software subscriptions - which have a defined term even if fully paid up-front - into revenue by spreading them over the term of the contract.
This results in the reported revenue being less than the actual closed sales in the period, reflecting the fact that revenue billed on a subscription basis accrues evenly over the contract term. While this results in a reduction to the reported revenue in the current period, it gives a guaranteed revenue stream for future periods before any new business is contracted.
Deferred income is recognised on the balance sheet, where contracted revenue has been invoiced on a subscription basis, but the term of the contract not yet finished. At 31 December 2015, this balance was GBP3.1 million (FY15: GBP2.4 million), of which GBP1.6 million will be recognised as revenue during the second half of the financial year. The majority of this deferred revenue will already have been collected in cash at this date.
Blancco grew its Invoiced Sales by 42% in the period compared to the previous six months on a constant currency basis.
Aftermarket Services (discontinued operations)
This division has been treated as discontinued in the current period following the Group's announcement of its disposal of the Repair Services Business and its intention to dispose of the Digital Care business. Accordingly, the results of these operations have been separately presented in the financial statements.
Repair Services (discontinued operations)
This business operates the client oriented electronic repair and refurbishment and includes the Group's previous Depot Solutions and Advanced Solutions divisions. It includes the operations in UK, Germany, Poland, Romania, Turkey, South Africa, Spain, Argentina, Mexico, India, Portugal, Russia, USA, Czech Republic and the Netherlands (opened August 2015).
Notwithstanding the disposal of the Repair Services business, the business has continued to generate strong profitability for the Group. Financial and operational highlights include:
-- Growth in LCD recovery and polishing work using our developed technology in Romania.
-- Significant wins and implementations of new business which is already starting to generate profit, particularly new insurance business in Germany and Romania, securing a contract for Europe wide repair volumes with one of our largest customers, and new mobile repair volumes in Mexico following new OEM accreditations gained in the period.
-- Growth in our US business with additional mobile repair volumes as well as new contracts for payment terminal repairs which expands this business which was previously conducted primarily from Germany.
-- Reduction in business with OEMs with declining market share, which has been replaced by new business wins across a number of sites, particularly in South Africa where we have secured a contract for Samsung repairs for the whole country.
-- Opening of a new facility in the Netherlands to service European set top box volumes for Liberty Global, which has successfully progressed beyond the initial trial phase.
Digital Care (discontinued operations)
This business operates in the mobile phone insurance market and provides smartphone accidental damage insurance programmes in partnership with insurance underwriters and is based in Poland.
Digital Care has grown its portfolio base across its operating partners in Poland, increasing by 50% in the period to over one million policies, with this growth expected to continue over H2.
Corporate Costs
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Total Group corporate costs of GBP2.6 million (H1 2015: GBP2.6 million) remain stable compared to the prior period. The corporate costs have been allocated between continuing and discontinued operations, with costs of GBP0.8 million having been incurred in H1 2016 to support the continuing Software business. This amount principally reflects the costs associated with being an AIM listed public company.
The annualised central cost for continuing operations for FY16 is expected to be GBP1.5 million which will be the cost base following a disposal of Repair Services and Digital Care.
Impact of foreign exchange movements
One of the risks that the Group faces by doing business in overseas markets is currency fluctuations. In order to manage the Group's currency fluctuations, the CFO conducts a quarterly review of the Group's currency hedging activities and a formal recommendation for any changes is made to the Board every half year.
The Group implements forward contracts for payments and receipts, where the amounts are large, are not denominated in the local country's functional currency, where the timing is known in advance, and where the amount can be predicted with certainty. In addition, the Group undertakes natural hedges by structuring and paying future earn-outs on acquisitions in the target company's local currency.
However the Group does not undertake any cash flow or profit hedging activities to insulate from currency movements in respect of overseas earnings, specifically the conversion of its largely non-Sterling generated income into the Group's reporting currency, Sterling.
No other hedging activities are undertaken in respect of tangible and intangible fixed assets, working capital (such as stock, debtors, or creditors), or other balance sheet items, as these are generally small in nature in any one individual country and are usually denominated in a country's own currency in order to create a natural hedge against currency movements.
For the continuing operations, overseas earnings are earned in Euros (representing approximately 22% of Invoiced Sales), US Dollars (28%) and Japanese Yen (20%). The movement on these exchange rates are summarised below:
Average Average
rate H1 rate H1
2016 2015 Movement
-------------- --------- --------- ---------
Euro 1.38 1.27 8.8%
US Dollar 1.53 1.62 (5.6%)
Japanese Yen 184.95 178.28 3.7%
--------------- --------- --------- ---------
The actual revenue and HOP for continuing operations in the period would have been higher by GBP0.4 million and GBP0.3 million if the exchange rates ruling during H1 2015 had held constant for the current period.
Cash and Working Capital
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited, (unaudited,
restated) restated)
GBP'm GBP'm GBP'm
------------------------------------ ------------ ------------ ------------
Headline Operating Cash
Flow before movement in
working capital and exceptionals 3.0 1.4 4.2
Movement in working capital
and exceptionals 0.3 0.8 0.5
Movement in provisions (0.1) (0.2) (0.4)
------------------------------------- ------------ ------------ ------------
Headline Operating Cash
Flow 3.2 2.0 4.1
Net interest payments (0.3) (0.1) (0.4)
Tax paid (0.4) (0.3) (0.6)
M&A payments (0.9) (0.8) (1.4)
Exceptional payments - (0.1) (0.1)
Net cash from operating
activities - continuing
operations 1.6 0.7 1.6
Net capital expenditure (1.0) (0.8) (1.8)
Acquisition of subsidiaries,
associates and other investments,
net of cash acquired (6.6) (4.1) (4.4)
Net cash flow from share
issues, option vesting
and dividend payments (2.6) (2.1) (6.9)
Other movements (0.8) (1.0) (2.0)
Cash flow on discontinued
operations (7.3) (1.4) 0.7
------------------------------------- ------------ ------------ ------------
Total cash flow (16.7) (8.7) (12.8)
------------------------------------- ------------ ------------ ------------
Net (debt)/cash (8.9) 12.1 7.8
------------------------------------- ------------ ------------ ------------
Group review
The cash flows of the discontinued operations have been removed from the cash flow statement and are presented separately.
Headline Operating Cash Flow ("HOCF") was GBP3.2 million (H1 2015: GBP2.0 million), with headline cash conversion of 119% (H1 2015: 154%). The conversion for the prior period was higher due to the mix of sales, with a number of subscription sales deferring revenue into H2 2015 and supressing the reported HOP in that period.
Tax paid was GBP0.4 million (H1 2015: GBP0.3 million), and is higher than the prior period driven by the continued year on year growth in Blancco profits.
Net interest paid was GBP0.3 million (H1 2015: GBP0.1 million) and is higher than the prior period due to the drawdown of borrowings during H1 2016.
Net debt for the total Group is GBP8.9 million (FY15: net cash of GBP7.8 million, H1 2015: net cash of GBP12.1 million). There has been a reduction in net cash from GBP7.8 million at 30 June 2015 despite operating cash inflow of GBP1.6 million due to cash outflows from investment in additional capital, M&A activity, including significant costs incurred in the Aftermarket Services disposal, and payment of the final dividend for the 2015 financial year.
Capital expenditure and R&D was GBP1.0 million (H1 2015: GBP0.8 million). Of this capital expenditure, GBP0.7 million (H1 2015: GBP0.5 million) was incurred in the ongoing development of the Blancco product range. During the period we developed an integrated data erasure and diagnostics tool as well as further developments on the LEE product.
Other movements of GBP0.8 million (H1 2015: GBP1.0 million) include changes in the value of overseas cash held on deposit when translated back into Sterling at the exchange rates prevailing at the end of the period.
Net debt of GBP8.9 million (FY15: net cash of GBP7.8 million, H1 2015: net cash of GBP12.1 million) comprised gross debt of GBP20.1 million (FY15: GBP4.4 million, H1 2015: GBPnil), and cash and cash equivalents of GBP11.2 million (FY15: GBP12.1 million, H1 2015: GBP12.1 million).
Merger and Acquisition activity
The Group has continued actively pursuing M&A opportunities.
Acquisition of Tabernus
In September 2015, Regenersis acquired 100% of the share capital of Tabernus LLC and Tabernus Europe Limited, a privately owned provider of software erasure. With the majority of its revenue in the USA, Tabernus is the USA market leader. The consideration was $12 million (GBP7.6 million) comprising cash payment of $10 million (GBP6.5 million) funded through the Group revolver facility and $2 million (GBP1.3 million) in deferred cash consideration payable after three years.
Exceptional acquisition costs
Acquisition costs amounted to GBP0.9 million (H1 2015: GBP1.3 million) with the most significant costs relating to the acquisition of Tabernus.
In addition, GBP1.9 million of fees have been incurred in the discontinued Aftermarket Services business, predominantly for disposal related costs. Further costs are expected during the second half of the year as the disposal process is completed.
Amortisation of intangible assets and R&D expenditure
Other costs excluded from HOP are the amortisation of intangible assets amounting to GBP1.3 million (H1 2015: GBP1.0 million), being the amortisation of intangibles in the Blancco business, and, since September 2015, the intangibles acquired in the Tabernus business.
Share based payments
Share based payments amounting to GBP0.4 million (H1 2015: GBP0.5 million) were also excluded from HOP. The current period includes the impact of the new Software LTIP, full details of which are provided in the Annual Report and Accounts for the year ended 30 June 2015.
Net financing income
Net financing cost was GBP0.5 million (H1 2015: GBP0.4 million). The costs in both periods include the unwind of deferred consideration on the Tabernus (H1 2016 only) and Blancco Sweden contingent consideration balances. In addition, finance costs are incurred for the use of the Group's revolving credit facility.
Taxation
The total tax charge was GBP0.4 million (H1 2015: GBP0.3 million charge). The increase in the period is a result of the higher profits generated by the Software group, which are generated in higher tax jurisdictions than the profits generated in the prior period.
Earnings per share
The continuing business has shown strong adjusted EPS growth to 2.43p (H1 2015: 0.63p) driven by the growth in Blancco revenues and margins. The negative basic earnings per share of (1.18p) (H1 2015: (2.83p)) is a result of the costs of investment in Tabernus, for which the Group will get the benefit of future profitability.
Subsequent events
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Sale of Regenersis (Depot Services) Limited
On 5 February 2016, Regenersis entered into a conditional sale and purchase agreement to dispose of its Aftermarket Services business (excluding Digital Care) to CTDI Repair Services Limited, a wholly owned subsidiary of Communications Test Design, Inc., for a cash consideration of EUR103.5 million.
The disposal is expected to complete during the second quarter of the calendar year.
Jog Dhody
Chief Financial Officer
Condensed Consolidated
Income Statement
for the six months ended
31 December 2015
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited, (unaudited,
restated) restated)
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- --------------- ------------ ------------
Continuing operations
revenue 2 9,918 6,801 15,013
Divisional operating
profit 2 3,514 1,911 5,382
Corporate costs (777) (603) (1,359)
Headline Operating Profit 2 2,737 1,308 4,023
Acquisition costs 6 (852) (1,300) (2,414)
Exceptional restructuring
costs 7 - (67) (67)
Amortisation of intangible
assets (1,296) (1,009) (2,026)
Share-based payments (372) (457) (371)
------------------------------- ----- --------------- ------------ ------------
Group operating profit/(loss) 217 (1,525) (855)
Share of results of
associates and jointly
controlled entities (46) (289) (746)
Operating profit/(loss) 171 (1,814) (1,601)
------------------------------- ----- --------------- ------------ ------------
Revaluation of contingent - - -
consideration
Other finance income 44 22 48
------------------------------- ----- --------------- ------------ ------------
Finance income 44 22 48
------------------------------- ----- --------------- ------------ ------------
Unwinding of contingent
consideration (148) (44) (171)
Other finance costs (369) (397) (672)
------------------------------- ----- --------------- ------------ ------------
Finance costs (517) (441) (843)
------------------------------- ----- --------------- ------------ ------------
Loss before tax (302) (2,233) (2,396)
Taxation 3 (378) (287) (869)
------------------------------- ----- --------------- ------------ ------------
Loss for the period 5 (680) (2,520) (3,265)
------------------------------- ----- --------------- ------------ ------------
Discontinued operations
Post tax results from
discontinued operations 8 1,102 6,801 8,382
Profit for the period 422 4,281 5,117
Attributable to:
Equity holders of the
Company 201 4,588 5,404
Non-controlling interest 221 (307) (287)
------------------------------- ----- --------------- ------------ ------------
Profit for the period 422 4,281 5,117
------------------------------- ----- --------------- ------------ ------------
Earnings per share
Continuing Operations: (1.18 (2.83 (3.84
Basic 4 p) p) p)
(1.18 (2.83 (3.84
Diluted 4 p) p) p)
Discontinued Operations:
10.81
Basic 4 1.44 p 8.70 p p
10.81
Diluted 4 1.44 p 8.70 p p
Total Group:
6.97
Basic 4 0.26 p 5.87 p p
6.97
Diluted 4 0.26 p 5.87 p p
Consolidated Statement
of Comprehensive Income
for the six months ended
31 December 2015
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------ ------------ ------------ --------------
Profit for the period 422 4,281 5,117
Other comprehensive income
- amounts that may be
reclassified to profit
or loss in the future:
Exchange differences arising
on translation of foreign
entities (138) (1,857) (3,786)
------------------------------ ------------ ------------ --------------
Total comprehensive income
for the period 284 2,424 1,331
------------------------------ ------------ ------------ --------------
Attributable to:
Equity holders of the
Company 63 2,731 1,618
Non-controlling interests 221 (307) (287)
------------------------------ ------------ ------------ --------------
Total comprehensive income
for the period 284 2,424 1,331
------------------------------ ------------ ------------ --------------
Condensed Consolidated
Balance Sheet
as at 31 December 2015
31 December 31 December
2015 2014 30 June
2015
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ------------ ------------ ----------
Assets
Non-current assets
Goodwill 40,885 83,147 83,157
Other intangible assets 12 22,761 28,734 27,041
Investments in jointly
controlled entities
and associates 14 1,804 2,303 1,850
Other Investments 14 61 75 61
Property, plant and
equipment 13 298 5,697 6,355
Deferred tax - 2,215 622
65,809 122,171 119,086
----------------------------- ----- ------------ ------------ ----------
Current assets
Inventory 228 9,951 9,480
Trade and other receivables 4,407 38,643 34,556
Cash 9 11,173 12,060 12,143
Assets held for sale 8 103,709 - -
----------------------------- ----- ------------ ------------ ----------
119,517 60,654 56,179
----------------------------- ----- ------------ ------------ ----------
Total assets 185,326 182,825 175,265
----------------------------- ----- ------------ ------------ ----------
Current liabilities
Trade and other payables (9,298) (42,779) (40,471)
Contingent consideration 15 (786) - (1,734)
Current tax liability (598) (2,159) (642)
Provisions (347) (634) (372)
Liabilities held for
sale 8 (28,413) - -
(39,442) (45,572) (43,219)
Non-current liabilities
Borrowings 9 (20,098) - (4,357)
Contingent consideration 15 (2,206) (5,906) (3,994)
Deferred tax (1,917) - -
Provisions (906) (2,323) (1,029)
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(25,127) (8,229) (9,380)
============================= ===== ============ ============ ==========
Total liabilities (64,569) (53,801) (52,599)
----------------------------- ----- ------------ ------------ ----------
Net assets 120,757 129,024 122,666
----------------------------- ----- ------------ ------------ ----------
Equity
Ordinary share capital 1,581 1,581 1,581
Share premium 51,737 51,737 51,737
Merger reserve 4,034 4,034 4,034
Translation reserve (7,253) (5,186) (7,115)
Retained earnings 70,199 76,554 72,191
----------------------------- ----- ------------ ------------ ----------
Total equity attributable
to equity holders of
the Company 120,298 128,720 122,428
Non-Controlling interest
reserve 459 304 238
----------------------------- ----- ------------ ------------ ----------
Total equity 120,757 129,024 122,666
----------------------------- ----- ------------ ------------ ----------
Condensed Consolidated Statement
of Changes in Equity
for the six months ended
31 December 2015
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ----------
Balance at the start
of the period 122,666 130,413 130,413
Total comprehensive income
for the period 284 2,424 1,331
Equity settled share
based payments 372 586 914
Acquisition of non-controlling
interest without a change
in control - (2,281) (2,938)
Purchase of company's
own shares - - (3,673)
Dividends paid (2,565) (2,118) (3,381)
Balance at the end of
the period 120,757 129,024 122,666
----------------------------------- ------------ ------------ ----------
Consolidated Cash Flow Statement
for the six months ended
31 December 2015
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited, (unaudited,
restated) restated)
Note GBP'000 GBP'000 GBP'000
---------------------------------- ----- ------------ ------------ ------------
Profit for the period 422 4,281 5,117
---------------------------------- ----- ------------ ------------ ------------
Adjustments for:
Results of discontinued
operations (1,102) (6,801) (8,382)
Net finance charges 473 419 795
Tax expense 378 287 869
Depreciation on property,
plant and equipment 67 59 29
Amortisation of intangible
assets 237 17 195
Amortisation of acquired
intangible assets 1,296 1,009 2,026
Share of losses of joint
ventures and associates 46 289 746
Share-based payments expense 372 457 371
---------------------------------- ----- ------------ ------------ ------------
Operating cash flow before
movement in working capital 2,189 17 1,766
---------------------------------- ----- ------------ ------------ ------------
Acquisition costs 852 1,300 2,414
Exceptional restructuring
costs - 67 67
---------------------------------- ----- ------------ ------------ ------------
Operating cash flow before
movement in working capital
and exceptional and acquisition
costs 3,041 1,384 4,247
---------------------------------- ----- ------------ ------------ ------------
Increase in inventories (52) (14) (19)
Increase in receivables (975) (493) (250)
Increase in payables and
accruals 1,322 1,792 1,462
Decrease in provisions (148) (186) (373)
---------------------------------- ----- ------------ ------------ ------------
Cash generated from continuing
operations 2,336 1,116 2,586
Acquisition costs payments 910 775 1,436
Exceptional restructuring
payments - 67 67
---------------------------------- ----- ------------ ------------ ------------
Headline Operating Cash
Flow 3,246 1,958 4,089
---------------------------------- ----- ------------ ------------ ------------
Interest received 45 22 48
Interest paid (368) (124) (424)
Tax paid (437) (266) (569)
---------------------------------- ----- ------------ ------------ ------------
Net cash inflow from operating
activities - continuing
operations 1,576 748 1,641
Net cash (outflow)/inflow
from operating activities
- discontinued operations 8 (4,109) 1,787 5,279
---------------------------------- ----- ------------ ------------ ------------
Net cash (outflow)/inflow
from operating activities
- continuing and discontinued
operations (3,528) 2,535 6,920
---------------------------------- ----- ------------ ------------ ------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (92) (52) (145)
Purchase and development
of intangible assets (951) (703) (1,651)
Acquisition of investment
in an associate - (1,912) (1,912)
Acquisition of subsidiaries,
net of cash acquired (6,565) (2,187) (2,450)
---------------------------------- ----- ------------ ------------ ------------
Net cash used in investing
activities - continuing
operations (7,608) (4,854) (6,158)
Net cash used in investing
activities - discontinued
operations 8 (3,151) (3,225) (4,551)
---------------------------------- ----- ------------ ------------ ------------
Net cash used in investing
activities - continuing
and discontinued operations (10,759) (8,079) (10,709)
---------------------------------- ----- ------------ ------------ ------------
Cash flows from financing
activities
Dividends paid (2,565) (2,118) (3,381)
Payment on vesting of share
options - - (80)
Drawdown/(repayment) of
borrowings 15,534 (655) 4,066
Repurchase of shares - - (3,550)
---------------------------------- ----- ------------ ------------ ------------
Net cash used in financing
activities 12,969 (2,773) (2,945)
Net cash used in financing - - -
activities - discontinued
operations
---------------------------------- ----- ------------ ------------ ------------
Net cash used in financing
activities - continuing
and discontinued operations 12,969 (2,773) (2,945)
Net decrease in cash and
cash equivalents (323) (8,317) (6,734)
Other non-cash movements
- exchange rate changes (647) (418) (1,918)
Cash and cash equivalents
at the beginning of period 12,143 20,795 20,795
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---------------------------------- ----- ------------ ------------ ------------ Cash and cash equivalents at end of period 11,173 12,060 12,143 Bank borrowings (20,098) - (4,357) ---------------------------------- ----- ------------ ------------ ------------ Net (debt)/cash (8,925) 12,060 7,786 ---------------------------------- ----- ------------ ------------ ------------
Notes to the Interim Report
for the six months ended 31 December 2015
1. Basis of preparation
This interim report has been prepared on the basis of the accounting policies expected to be adopted for the year ended 30 June 2016. 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 2015. The Group's accounting policies can also be found on the Group's website.
All International Financial Reporting Standards ('IFRS'), International Accounting Standards ('IAS') and interpretations currently endorsed by the International Accounting Standards Board ('IASB') and its committees as adopted by the EU 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.
In preparing the interim report, certain lines of business have been reclassified as discontinued and the primary statement adjusted accordingly, and in line with IFRS 5, Non-current Assets Held For Sale and Discontinued Operations. Where prior period information has been restated, this has been extracted from the full group results in the audited Annual Report and Accounts for the year ended 30 June 2015, and the full group results for the six month period to 31 December 2014 being unaudited.
The financial information in this interim report does not constitute statutory accounts for the six months ended 31 December 2015 and should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2015.
The condensed consolidated interim financial statements for the six months to 31 December 2015 have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.
This unaudited interim report was approved by the Board of Directors on 8 March 2016.
2. Segmental reporting
As outlined in the Group Financial Review, the Group's management structure is reported in two distinct Divisions:
-- The Software Division represents the continuing business and focuses on development and delivery of innovative solutions, and includes:
o Blancco, the global market leader data erasure software.
o SafeIT, acquired in September 2014, the leading specialist cloud and networked data erasure business.
o Tabernus, acquired in September 2015, the US market leader of software erasure products.
o Xcaliber Technologies, a smartphone diagnostics software business. The Group holds 49% a stake in this business.
Both SafeIT and Tabernus have been integrated into Blancco.
-- The Aftermarket Services Division represents the discontinued business and operates client oriented electronic repair and refurbishment and includes the Group's previous Depot Solutions and Advanced Solutions divisions. It includes the operations in UK, Germany, Poland, Romania, Turkey, South Africa, Spain, Argentina, Mexico, India, Portugal, Russia, USA, Czech Republic and the Netherlands (opened August 2015). This division has been treated as discontinued in the current period following the Group's announcement of its disposal of the Repair Services Business and its intention to dispose of the Digital Care business.
6 months Year
ended ended
31-Dec-14 30-Jun-15
6 months
ended
31-Dec-15 (unaudited) (unaudited)
(unaudited) (restated) (restated)
Continuing operations GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- -------------
Software revenue 10,207 6,801 15,150
Less: share of jointly controlled
entity (289) - (136)
Software revenue 9,918 6,801 15,014
-------------------------------------- ------------- ------------- -------------
Software Divisional Operating
Profit 3,514 1,911 5,382
Corporate costs (777) (603) (1,359)
Headline Operating Profit 2,737 1,308 4,023
M&A costs (852) (1,300) (2,414)
Exceptional restructuring costs - (67) (67)
Amortisation of intangible assets (1,296) (1,009) (2,026)
Share-based payments (372) (457) (371)
====================================== ============= ============= =============
Group Operating Profit/(loss) 217 (1,525) (855)
Share of results of equity accounted
investments (46) (289) (746)
Operating profit/(loss) 171 (1,814) (1,601)
Finance income 44 22 48
Unwinding of discount factor
on contingent consideration (148) (44) (171)
Other finance costs (369) (397) (672)
====================================== ============= ============= =============
Net finance cost (473) (419) (795)
====================================== ============= ============= =============
Loss before tax (302) (2,233) (2,396)
====================================== ============= ============= =============
6 months Year
ended ended
31-Dec-14 30-Jun-15
6 months
ended
31-Dec-15 (unaudited) (unaudited)
(unaudited) (restated) (restated)
Discontinued operations GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -------------
Aftermarket Services revenue 99,915 95,140 187,550
Aftermarket Services Divisional
Operating Profit 6,550 6,674 15,201
Corporate costs (1,800) (1,970) (3,798)
Headline Operating Profit 4,750 4,704 11,403
M&A costs (1,875) - (627)
Exceptional restructuring costs (246) (348) (611)
Amortisation of intangible
assets (240) (82) (1,323)
Share-based payments (377) (129) (160)
========================================= ============= ============= =============
Group Operating Profit before
disposal of subsidiaries 2,012 4,145 8,682
Loss on disposal of subsidiaries - - (1,456)
========================================= ============= ============= =============
Group Operating Profit 2,012 4,145 7,226
Finance income 12 32 95
Revaluation of contingent consideration - 2,244 3,302
Unwinding of discount factor
on contingent consideration (197) (403) (763)
Other finance costs (580) (283) (667)
========================================= ============= ============= =============
Net finance income (765) 1,590 1,967
========================================= ============= ============= =============
Profit before tax 1,247 5,735 9,193
========================================= ============= ============= =============
3. Taxation
The tax charge for the six months to 31 December 2015 is based on the estimated tax rate for the full year in each jurisdiction.
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The effective tax rate on HOP is 20.7% (H1 2015: 21.9%), which reflects the mix of profits of the Blancco group generated in a broader range of jurisdictions around the world, many of which attract high tax rates.
4. Earnings per share (EPS)
6 months 6 months
ended ended Year ended
31-Dec-15 31-Dec-14 30-June-2015
(unaudited) (unaudited) (unaudited)
Pence Pence Pence
------------ ------------ -------------
Continuing operations
(1.18 (2.83 (3.84
Basic earnings per share p) p) p)
(1.18 (2.83 (3.84
Diluted earnings per share p) p) p)
Adjusted earnings per
share 2.43 p 0.63 p 2.84 p
Diluted adjusted earnings
per share 2.43 p 0.63 p 2.84 p
--------------------------------- ------------ ------------ -------------
Discontinued operations
10.81
Basic earnings per share 1.44 p 8.70 p p
10.81
Diluted earnings per share 1.44 p 8.70 p p
Adjusted earnings per 13.34
share 5.09 p 6.93 p p
Diluted adjusted earnings 5.09 6.93 p 13.34
per share p p
--------------------------------- ------------ ------------ -------------
Total Group
Basic earnings per share 0.26 p 5.87 p 6.97 p
Diluted earnings per share 0.26 p 5.87 p 6.97 p
Adjusted earnings per 16.18
share 7.52 p 7.56 p p
Diluted adjusted earnings 7.52 7.56 p 16.18
per share p p
--------------------------------- ------------ ------------ -------------
6 months 6 months
ended ended Year ended
31-Dec-15 31-Dec-14 30-June-2015
(unaudited) (unaudited) (unaudited)
Continuing operations GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ -------------
Loss for the period (680) (2,520) (3,265)
(Profit)/loss attributable
to non-controlling interests (221) 307 287
---------------------------------
Loss attributable to equity
holders of the Company (901) (2,213) (2,978)
---------------------------------
Reconciliation to adjusted
profit:
Unwinding of discount
on contingent consideration 148 44 171
Acquisition costs 852 1,300 2,414
Amortisation of intangible
assets 1,296 1,009 2,026
Exceptional restructuring
costs - 67 67
Exceptional bank charges 134 124 248
Share based payments 372 457 371
Tax impact of above adjustments (39) (293) (114)
--------------------------------- ------------ ------------ -------------
Adjusted profit for the
period 1,862 495 2,205
--------------------------------- ------------ ------------ -------------
Number of shares '000s '000s '000s
Weighted average number of shares
used to calculate earnings per
share
* Basic 76,580 78,171 77,550
* Diluted 76,593 78,171 77,563
---------------------------- -------- ------- -------
5. Profit for the year
Profit for the year for the entire group has been arrived at after charging/(crediting):
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- ----------
Depreciation of property,
plant and equipment - owned 446 1,206 1,702
Loss/(profit) on disposal
of property, plant and
equipment 25 (1) 114
Amortisation of intangible
assets 2,052 2,127 4,452
Cost of inventories recognised
as an expense 51,584 49,741 91,372
Staff costs 31,021 32,379 60,368
Net foreign exchange
loss/(profit) 179 131 (233)
---------------------------------- ------------- ------------- ----------
The figures for the Group's continuing operations are as follows:
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- ------------
Depreciation of property,
plant and equipment - owned 67 59 29
Loss on disposal of property, - - -
plant and equipment
Amortisation of intangible
assets 1,533 1,026 2,221
Cost of inventories recognised
as an expense 143 42 112
Staff costs 3,817 3,210 6,219
Net foreign exchange
loss/(profit) 293 (59) (273)
---------------------------------- ------------- ------------- ------------
6. Acquisition costs
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited, (unaudited,
(unaudited) restated) restated)
GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ------------
Acquisition costs and
other M&A related costs 852 1,300 2,414
---------------------------- ------------- ------------- ------------
Acquisition costs relate to the M&A activity within the year, with the most significant costs relating to the acquisition of Tabernus.
Deal costs not included above relate to the disposal of the Aftermarket Services Division totalling GBP1.9 million for the period (GBPnil for the same period last year) as they are presented within discontinued operations.
7. Exceptional restructuring costs
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited, (unaudited,
(unaudited) restated) restated)
GBP'000 GBP'000 GBP'000
-------------------------------- -------------- ------------- ------------
Redundancies and restructuring - 67 67
No exceptional restructuring costs have been recorded in the current period (H1 2015: GBP0.1 million relating to integration activities).
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Exceptional redundancy and restructuring costs not included above relate to the restructuring activities for the disposal of Aftermarket Services totalling GBP0.2 million for the period (GBP0.3 million for the same period last year), as they are presented within discontinued operations.
8. Discontinued Operations
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
---------------------------- --- ------------ ------------ ------------
Discontinued operations
revenue 99,915 95,140 187,550
Divisional operating
profit 6,550 6,674 15,160
Head office costs (1,800) (1,970) (3,757)
Headline Operating Profit 4,750 4,704 11,403
Acquisition and disposal
costs (1,875) - (611)
Exceptional restructuring
costs (246) (348) (627)
Amortisation of intangible
assets (240) (82) (1,323)
Share-based payments (377) (129) (160)
--------------------------------- ------------ ------------ ------------
Group operating profit 2,012 4,145 8,682
Loss on disposal of
subsidiaries - - (1,456)
--------------------------------- ------------ ------------ ------------
Operating Profit 2,012 4,145 7,226
--------------------------------- ------------ ------------ ------------
Revaluation of contingent
consideration - 2,244 3,302
Other finance income 12 32 95
--------------------------------- ------------ ------------ ------------
Finance income 12 2,276 3,397
--------------------------------- ------------ ------------ ------------
Unwinding of contingent
consideration (197) (403) (763)
Other finance costs (580) (283) (667)
--------------------------------- ------------ ------------ ------------
Finance costs (777) (686) (1,430)
--------------------------------- ------------ ------------ ------------
Profit before tax 1,247 5,735 9,193
Taxation (145) 1,066 (811)
--------------------------------- ------------ ------------ ------------
Profit for the period 1,102 6,801 8,382
--------------------------------- ------------ ------------ ------------
The assets and liabilities included in the condensed consolidated balance sheet as held for sale are as follows:
31 December 2015
(unaudited)
GBP'000
------------------------------- -----------------
Assets
Goodwill 49,815
Other intangible assets 5,798
Property, plant and equipment 6,937
Deferred tax 3,364
Inventory 9,965
Trade and other receivables 27,830
Total assets held for
sale 103,709
-------------------------------- -----------------
Current liabilities
Trade and other payables (25,393)
Contingent consideration (3,020)
Total liabilities held
for sale (28,413)
-------------------------------- -----------------
The cash flows associated with the discontinued operations are as follows:
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ----------- -----------
Profit for the period 1,102 6,801 8,382
----------------------------------- ------------ ----------- -----------
Adjustments for:
Net finance charges/(income) 765 (1,590) (1,967)
Tax expense/(credit) 145 (1,066) 811
Depreciation on property,
plant and equipment 379 1,147 1,673
Amortisation of intangible
assets 279 1,019 908
Amortisation of acquired
intangible assets 240 82 1,323
Loss on disposal of subsidiary - - 1,456
(Gain)/loss on disposal
of property, plant and
equipment - (1) 114
Share-based payments expense 377 129 160
----------------------------------- ------------ ----------- -----------
Operating cash flow before
movement in working capital 3,287 6,521 12,860
----------------------------------- ------------ ----------- -----------
(Increase)/decrease in
inventories (745) 218 (358)
Decrease/(increase) in
receivables 1,834 (523) 1,333
Decrease in payables and
accruals (7,693) (4,232) (6,329)
Decrease in provisions - (108) (1,451)
----------------------------------- ------------ ----------- -----------
Cash generated from discontinued
operations (3,317) 1,876 6,055
Net interest (568) 73 (382)
Tax paid (224) (162) (394)
----------------------------------- ------------ ----------- -----------
Net cash outflow from operating
activities - discontinued
operations (4,109) 1,787 5,279
----------------------------------- ------------ ----------- -----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (1,226) (1,596) (2,443)
Purchase and development
of intangible assets (930) (1,637) (3,098)
Proceeds from sale of property,
plant and equipment - 8 990
Acquisition of subsidiaries
and payment of contingent
consideration (995) - -
----------------------------------- ------------ ----------- -----------
Net cash used in investing
activities - discontinued
operations (3,151) (3,225) (4,551)
----------------------------------- ------------ ----------- -----------
9. Net Cash
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2015 2014 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------- ------------- ------------- -----------
Cash 11,173 12,060 12,143
Bank borrowings (20,098) - (4,357)
------------------ ------------- ------------- -----------
Net (debt)/cash (8,925) 12,060 7,786
------------------ ------------- ------------- -----------
The total facility available to the Group is GBP39 million (30 June 2014: GBP39 million; 31 December 2014: GBP39 million). The facility expires on 31 October 2019, and all banking covenants were met during the period.
10. Acquisition of Tabernus
On 11 September 2015 the Group completed the acquisition of 100% of the issued share capital of Tabernus LLC and Tabernus Europe Limited for a headline price of $12 million, consisting of consideration of $9.7 million (GBP6.4 million) and debt acquired of $0.3 million (GBP0.2 million), which was funded though the Group's cash reserves. The debt was immediately settled on completion. Deferred consideration of $2 million (GBP1.3 million) is payable three years from acquisition.
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The provisional book value and fair value of the assets acquired and liabilities assumed were as follows:
Book Fair Value Fair
Value adjustments Value
and IFRS
alignment
GBP'000 GBP'000 GBP'000
------------------------------- --------- ------------- ---------
Intangible assets arising
on consolidation - 1,548 1,548
Property, plant and equipment 30 (30) -
Deferred tax - 32 32
Overdraft and other short
term borrowings (175) - (175)
Trade and other receivables 257 (42) 215
Trade and other payables (163) (1,677) (1,840)
Net assets acquired (51) (169) (220)
Goodwill 7,544
------------------------------- --------- ------------- ---------
Total consideration 7,324
------------------------------- --------- ------------- ---------
Satisfied by:
Cash paid 6,390
Deferred consideration 934
Total consideration 7,324
------------------------------- --------- ------------- ---------
Cash flow - acquisition of subsidiaries net of cash acquired
Within the consolidated cash flow statement, the cash flow relating to the Tabernus acquisition, net of cash acquired is reconciled per the table below:
GBP'000
---------------------------------------------- --------
Cash consideration 6,390
Overdraft acquired 4
Debt acquired 171
Net cash flow - acquisition of subsidiaries,
net of cash acquired 6,565
----------------------------------------------- --------
Contingent cash consideration
The acquisition includes an earn-out based to be paid in September 2018. The estimated cash outflow at the time of settlement will be $2 million (GBP1.3 million). A deferred liability of $1.4 million (GBP0.9 million) has been established which represents the fair value at the acquisition date, using a discount rate of 12%. At 31 December 2015, the deferred liability was $1.5 million (GBP1.0 million).
11. Acquisition of SafeIT
During the previous financial year, the Group completed the acquisition of 100% of the issued share capital of SafeIT Security Sweden AB for a consideration of EUR1.8 million (GBP1.4 million), which was funded through the Group's cash reserves.
The book value and fair value of the assets acquired and liabilities assumed were as follows:
Book Fair Value Fair
Value adjustments Value
and IFRS
alignment
GBP'000 GBP'000 GBP'000
------------------------------- --------- ------------- ---------
Intangible assets- arising
on consolidation - 197 197
Property, plant and equipment 3 (3) -
Deferred tax (11) 18 7
Cash 153 - 153
Trade and other receivables 29 (27) 2
Trade and other payables (55) (310) (365)
Net assets acquired 119 (125) (6)
Goodwill 1,410
------------------------------- --------- ------------- ---------
Total consideration 1,404
------------------------------- --------- ------------- ---------
Satisfied by:
Cash paid in H1 2015 1,404
Total consideration 1,404
------------------------------- --------- ------------- ---------
12. Intangible assets
Brand Intellectual Customer Development Software
Name Property contracts expenditure licences Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ======== ============= ============= ============= ========== =========
Cost
At 1 July
2014 (audited) 2,888 11,872 10,960 5,277 4,846 35,843
Additions - - - 3,959 790 4,749
On acquisitions - - 197 - - 197
Disposals - - - (219) (1,357) (1,576)
Reclassification - - - (1,141) - (1,141)
Exchange movement - - - (66) (485) (551)
=================== ======== ============= ============= ============= ========== =========
At 30 June
2015 (audited) 2,888 11,872 11,157 7,810 3,794 37,521
Additions - - - 946 935 1,881
On acquisitions 271 582 695 - - 1,548
Disposals - - - - (20) (20)
Reclassification - - - - - -
Exchange movement - - - 167 69 236
Reclassification
of assets
held for sale - - (3,600) (6,822) (3,361) (13,783)
=================== ======== ============= ============= ============= ========== =========
At 31 December
2015 (unaudited) 3,159 12,454 8,252 2,101 1,417 27,383
=================== ======== ============= ============= ============= ========== =========
Accumulated
amortisation
At 1 July
2014 (audited) 43 247 2,994 1,453 2,627 7,364
Charge for
the year 206 1,187 787 1,169 1,103 4,452
Disposals - - - (407) (724) (1,131)
Exchange Movement - - - 8 (213) (205)
=================== ======== ============= ============= ============= ========== =========
At 30 June
2015 (audited) 249 1,434 3,781 2,223 2,793 10,480
Charge for
the year 158 616 390 372 516 2,052
On acquisitions - - - - - -
Disposals - - - - - -
Exchange movement - - - 28 47 75
Reclassification
of assets
held for sale - - (3,092) (2,293) (2,600) (7,985)
=================== ======== ============= ============= ============= ========== =========
At 31 December
2015 (unaudited) 407 2,050 1,079 330 756 4,622
=================== ======== ============= ============= ============= ========== =========
Net book value
at 31 December
2015 (unaudited) 2,752 10,404 7,173 1,771 661 22,761
=================== ======== ============= ============= ============= ========== =========
Net Book value
at 30 June
2015 (audited) 2,639 10,438 7,376 5,587 1,001 27,041
Net book value
at 30 June
2014 (audited) 2,845 11,625 7,966 3,824 2,219 28,479
=================== ======== ============= ============= ============= ========== =========
13. Property, plant and equipment
Fixtures
Leasehold Plant Computer Motor and
improvements and machinery equipment vehicles fittings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ============== =============== =========== ========== ========== =========
Cost
At 1 July 2014
(audited) 4,862 9,341 6,529 107 3,295 24,134
Additions 588 364 752 - 884 2,588
Disposals (621) (1,864) (1,741) (15) (210) (4,451)
Reclassification - 1,141 - - - 1,141
Exchange movement (425) (509) (310) (5) (255) (1,504)
=================== ============== =============== =========== ========== ========== =========
At 30 June 2015
(audited) 4,404 8,473 5,230 87 3,714 21,908
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Additions 267 337 337 1 376 1,318 Disposals (21) (139) (89) - (28) (277) Exchange movement 34 12 41 (3) 60 144 Reclassification of assets held for sale (4,449) (8,683) (5,392) (85) (3,824) (22,433) =================== ============== =============== =========== ========== ========== ========= At 31 December 2015 (unaudited) 235 - 127 - 298 660 =================== ============== =============== =========== ========== ========== ========= Accumulated depreciation At 1 July 2014 (audited) 2,936 7,772 5,476 45 2,564 18,793 Charge for the year 461 146 663 17 415 1,702 Disposals (584) (1,413) (1,718) (9) (153) (3,877) Exchange movement (250) (400) (238) (5) (172) (1,065) =================== ============== =============== =========== ========== ========== ========= At 30 June 2015 (audited) 2,563 6,105 4,183 48 2,654 15,553 Charge for the year 131 48 145 - 122 446 Disposals - (128) (81) - (13) (222) Exchange movement 8 21 27 (3) 28 81 Reclassification of assets held for sale (2,534) (6,046) (4,162) (45) (2,709) (15,496) =================== ============== =============== =========== ========== ========== ========= At 31 December 2015 (unaudited) 168 - 112 - 82 362 =================== ============== =============== =========== ========== ========== ========= Net book value at 31 December 2015 (unaudited) 67 - 15 - 216 298 =================== ============== =============== =========== ========== ========== ========= Net book value at 30 June 2015 (audited) 1,841 2,368 1,047 39 1,060 6,355 Net book value at 30 June 2014 (audited) 1,926 1,569 1,053 62 731 5,341 =================== ============== =============== =========== ========== ========== =========
14. Investments
The Group's subsidiary undertakings and investments for continuing operations are as follows:
Ownership
percentage
by the
Group
as at
Principal activity 31 December Country of
Company name of the company 2015 incorporation
========================= ===================== ============= ===============
Held directly by the Company
Blancco Technology Holding Company 100% England and
Group Ltd Wales
Regenersis Central Holding Company 100% England and
Services Ltd Wales
Regenersis (IG) Holding Company 100% England and
Ltd Wales
Regenersis Mobile Dormant 100% England and
Diagnostics Ltd Wales
Regenersis Refurbishment Dormant 100% England and
LLP Wales
Regenersis (Sweden) Holding Company 50% England and
Ltd Wales
Regenersis TrustSub Trustee for the 100% England and
Ltd Regenersis Employee Wales
Benefit Trust
Regenersis Trustees Trustee for the 100% England and
Ltd Regenersis Employee Wales
Benefit Trust
Held indirectly
by the company
Regenersis Distribution Non-trading entity 100% England and
Ltd Wales
Regenersis Finance Holding Company 100% England and
Ltd Wales
Regenersis Finland Holding Company 100% Finland
Acquisitions Oy
Regenersis Finland Holding Company 100% Finland
Oy
Xcaliber Infotech Mobile diagnostics 15% India
Private Ltd
Regenersis Cooperatife Holding Company 100% Netherlands
WA
Regenersis Finance Holding Company 100% Netherlands
BV
Regenersis Finance Holding Company 100% Netherlands
US BV
Regenersis (Software) Holding Company 100% Netherlands
Netherlands BV
Regenersis Mobile Holding Company 100% United States
Diagnostics Inc of America
Regenersis (Software) Holding Company 100% United States
Services US Inc of America
Regenersis (Software) Holding Company 100% United States
Services US LLC of America
Xcaliber Technologies Mobile diagnostics 49% United States
LLC of America
Xcaliber IP LLC Mobile diagnostics 49% United States
of America
Blancco Oy Ltd* Data erasure 100% Finland
Blancco UK Ltd Data erasure 100% England and
Wales
Blancco Italy SRL Data erasure 100% Italy
Blancco France Data erasure 51% France
SAS*
Software Blancco Data erasure 51% Mexico
S.A. de C.V. Mx*
Blancco US LLC Data erasure 100% United States
of America
Blancco Central Data erasure 100% Germany
Europe GmbH*
Blancco Canada Data erasure 50% Canada
Inc
Blancco SEA Sdn Data erasure 100% Malaysia
Bhd
Blancco Australasia Data erasure 100% Australia
Pty Ltd
Blancco Japan Inc* Data erasure 51% Japan
Blancco Sweden Data erasure 100% Sweden
SFO*
SafeIT Security Data erasure 100% Sweden
Sweden AB*
Tabernus LLC Data erasure 100% United States
of America
Tabernus Europe Data erasure 100% England and
Limited Wales
*Year end date is 31 December
All investments are in the ordinary share capital of the subsidiaries. Xcaliber Infotech Private Ltd, Xcaliber Technologies LLC and Xcaliber IP LLC are associates and are not consolidated.
All other subsidiaries are included in the consolidated results of the Group.
A reconciliation of total investments is as follows:
Total Total
========================================
6 months Year ended
to 31 30 June
December 2015
2015
(unaudited) (audited)
========================================
GBP'000 GBP'000
======================================== ==== ============= ===========
At beginning of period 1,850 10
Transfer of carrying value on recognition
of significant influence - 684
Acquisition of investment - 1,912
Disposal of investment - (10)
Retained loss (46) (746)
At end of period 1,804 1,850
---------------------------------------------- ------------- -----------
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The investment at 31 December 2015 relates to Xcaliber Technologies LLC in which the Group owns a 49% stake.
The Group's investments are presented in the following captions on the balance sheet.
6 months
to 31 Year Ended
December 30 June
2015 2015
(unaudited) (audited)
GBP'000 GBP'000
=================== ======= ====== === ============= ===========
Equity accounted investments 1,804 1,850
Other investments 61 61
Total 1,865 1,911
========================================= ============= ===========
15. Contingent consideration
HDM Blancco Tabernus
Digicomp Sweden Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------- -------- ---------- --------
At 1 July 2015 (audited) 2,823 995 1,910 - 5,728
Created on acquisition - - - 934 934
Unwinding of discount
factor on contingent
consideration 197 - 120 28 345
Payment of contingent
consideration - (995) - - (995)
--------------------------- --------- -------- -------- ---------- --------
At 31 December 2015
(unaudited) 3,020 - 2,030 962 6,012
--------------------------- --------- -------- -------- ---------- --------
Of the contingent consideration payable, the amounts relating to Blancco Sweden and Tabernus are classed as continuing.
Of the amount relating to Blancco Sweden, GBP0.8 million of this is payable within one year and is therefore categorised as current.
16. Subsequent events
Sale of Regenersis (Depot Services) Limited
On 5 February 2016, Regenersis entered into a conditional sale and purchase agreement to dispose of its Aftermarket Services business (excluding Digital Care) to CTDI Repair Services Limited, a wholly owned subsidiary of Communications Test Design, Inc., for a cash consideration of EUR103.5 million.
The disposal is expected to complete during the second quarter of the calendar year
17. Cautionary statement
This document contains certain forward-looking statements with respect of the financial condition, results, operations and businesses of Regenersis plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause the actual result or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this document should be construed as a profit forecast.
18. Copies of the interim report
Further copies of the interim report are available from the registered office, 190 High Street, Tonbridge, Kent, TN9 1BE, or on the Company's website - www.regenersis.com.
19. Adoption of Financial Reporting Standard 101 (FRS 101)
A new UK GAAP accounting framework introduced by the Financial Reporting Council (FRC) became mandatorily effective for the financial statements of UK companies with accounting periods commencing on or after 1 January 2015. Under this new framework, the Company is required to elect to prepare its parent company financial statements on one of the bases permitted by the FRC.
The Board considers that it is in the best interests of the Group for the Company to adopt FRS 101 Reduced Disclosure Framework for its parent company financial statements for the year ended 30 June 2016, which will be included in the Group's Annual Report and Accounts. As a result of taking the possible disclosure exemptions permitted under FRS 101, disclosures are expected to be the same as, or follow closely, those reported under current UK GAAP.
Although the decision does not require formal shareholder approval, the Company is required to notify all shareholders and any shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in the Company may object. Objections must be served on the Company in writing and delivered to the Company Secretary at the Company's registered office (190 High Street, Tonbridge, Kent, TN9 1BE) not later than 22 April 2016.
The consolidated financial statements of the Group will continue to be prepared in accordance with EU-adopted International Financial Accounting Standards (IFRS) and are unaffected by this new accounting framework.
Glossary
Adjusted Earnings Per Share: Adjusted earnings are stated before amortisation or impairment of acquired intangible assets and development costs capitalised, amortisation of bank fees, exceptional restructuring costs, acquisition costs, share-based payments, losses on disposals of investments and jointly controlled entities, unwinding of the discounted contingent consideration, adjustments to estimates of contingent consideration, and tax impacts of the above. 'Adjusted earnings per share' is the key earnings per share measure used by the Board.
Aftermarket Services (segment): Contains the Group's previous Depot Solutions and Advanced Solutions segments. This segment is available for sale (with an agreement to sell the Repair Services business having been reached on 5 February 2016 and continued marketing of the Digital Care business), and has been presented as a discontinued operation in these accounts.
APAC: The Asia Pacific region.
Basic Earnings Per Share: Profit after tax attributable to the equity holders of the Company, stated per share.
Capital Expenditure: Expenditure on property, plant and equipment, intangible assets, and capitalised R&D.
Contingent Consideration: A future cash payment for vendors of acquired companies, contingent on that company's performance in a pre-determined period after acquisition. This is recorded within the balance sheet and reassessed at each reporting period.
Corporate Costs: Costs incurred centrally for the benefit of the Group as a whole and which cannot be allocated to specific Divisions or subsidiaries.
Digital Care: Part of the Aftermarket Services segment (but not the Repair Services Business) which operates in the mobile phone insurance market.
Diluted Adjusted Earnings Per Share: Adjusted earnings per share stated after adjustments to the number of shares for convertible share options.
Diluted Earnings Per Share: Basic earnings per share stated after adjustments to the number of shares for convertible share options.
Earn-out: See 'Contingent Consideration'.
Forward Contracts (currency hedging): A mechanism for fixing the future exchange rates for known and committed cash flows in order to mitigate the exposure of the Group to movements on exchange rates for these cash flows.
Gross Debt: The total external borrowings of the Group, net of capitalised bank fees.
Headline Cash Conversion: Headline Operating Cash Flow stated as a percentage of Headline Operating Profit.
Headline Operating Cash Flow or HOCF: Operating cash flow excluding taxation, interest payments and receipts, acquisition costs, and exceptional restructuring costs. This measure excludes capital expenditure. This is the key operating cash flow measure used by the Board to assess the underlying cash flow of the Group.
Headline Operating Margin: Headline Operating Profit stated as a percentage of revenue.
Headline Operating Profit or HOP: Operating Profit stated before acquisition costs (because these are one off in nature), exceptional restructuring costs (because these are not considered to reflect the underlying performance of the Group's operating business), share-based payment charges (because these represent a non-cash accounting charge for long term incentives to senior management rather than the underlying operations of the Group's business), Amortisation or impairment of acquired intangible assets (because these are non-cash charges arising as a result of the application of acquisition accounting, rather than core operations), the non-cash amortisation charge of development expenditure capitalised (because this does not reflect an ongoing cash outflow of the Group), and disposal of subsidiaries (because these represent a one off non-cash charge to the Consolidated Income Statement)
Live Environment (data erasure): Data erasure within active computer applications, including servers and networks of computers. The main application is for data that has expired on systems or where unnecessary duplication of data exists, and to provide selective erasure of that data.
M&A: Mergers and acquisitions. This is the Group's activity in acquisitions of other companies, both to full and part ownership.
Net Cash/Debt: Cash stated after offsetting gross debt against cash reserves.
Non-controlling interest: Regenersis does not fully own some of its subsidiaries, and for those in which the ownership is shared, the other party is the 'non-controlling interest'. This is relevant for all subsidiaries in which Regenersis owns (directly or indirectly) between 50% and 99% of the share capital; in the current and prior period these are only some Blancco sales offices. At the end of each reporting period, the Group must allocate the non-controlling interest its share of profits and net assets in the subsidiary in which ownership is shared, which are recorded through the Consolidated Income Statement and Consolidated Balance Sheet respectively.
OEM: An 'Original Equipment Manufacturer'.
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