Blancco Technology Group plc
Annual Report
and Accounts
2022
We provide
organisations with
secure, compliant,
and automated
solutions that
accelerate the
transition to the
circular economy.
blancco.com
Contents
Strategic Report
Highlights
.001
Positioned for Resilient Growth
.002
At a Glance
.004
Chair’s Statement
.006
Investment Case
.008
Marketplace
.010
Chief Executive’s Report
.012
Business Model
.016
Strategy and Progress
.020
Strategy in Action
.022
Key Performance Indicators
.026
ESG Report
.030
Chief Financial Officer’s Report
.044
Principal Risks and Uncertainties
.046
Corporate Governance
Directors and Advisors
.053
Corporate Governance Report
.055
Directors’ Report
.060
Audit Committee Report
.064
Remuneration Committee Report
.068
Statement of directors’ responsibilities
in respect of the financial statements
.073
Financial Statements
Independent auditors’ report
.075
Consolidated Income Statement
.080
Consolidated Statement of
Comprehensive Income
.081
Consolidated Balance Sheet
.082
Consolidated Statement of Changes in Equity.084
Consolidated Cash Flow Statement
.085
Notes to the Accounts
.087
Company Balance Sheet
.110
Company Statement of Changes in Equity
.111
Notes to the Company Financial Statement
.112
Additional Information
Notice of AGM
.116
Glossary
.119
2022 |
2021 |
39.8
36.5
2022 |
2021 |
1.9
1.8
2022 |
2021 |
6.2
10.1
2022 |
2021 |
2.71
1.84
2022 |
2021 |
6.5
5.3
2022 |
2021 |
10.8
10.8
Financial
Highlights
Revenue £m
Adjusted Operating Cash Flow* £m
Group Adjusted Operating Profit* £m
Earnings per share pence
Group Operating Profit £m
Net Funds £m
Read more about our financial performance in the
Chief Financial Officer’s Report | Pages 44-45
Operational
Read more about our operational performance
in the Chief Executive’s Report | Pages 12-15
Acquisition of US-based erasure specialist WipeDrive
Inc. (“WipeDrive”) completed in June 2022 for initial
consideration of US$8.5 million with up to US$1.5
million contingent consideration to be paid twelve
months following the acquisition dependent on
achieving certain customer retention targets
Sales strategy evolved further with revenue generated
from channel partners continuing to grow strongly with
channel revenue growing by 23% to £8.0 million
(FY 2021: £6.5 million) and now representing 52%
(FY 2021: 45%) of Enterprise revenue
High customer retention levels of 100% (FY 2021:
98.4%) of largest clients (£100k+) in the period
+9%
+23%
+47%
+6%
£39.8m
£10.8m
£6.5m
2.71p
£1.9m
£6.2m
2021 | £36.5m
2021 | £10.8m
2021 | £5.3m
2021 | 1.84p
2021 | £1.8m
2021 | £10.1m
Increasing sustainability and governance pressures on
companies continue to drive growth in both Enterprise
and IT Asset Disposition (“ITAD”) revenues, particularly
benefitting from the Group’s strategic acquisitions,
product suite innovation and go to market strategy
Carbon neutrality status achieved for the 2021
calendar year
*Adjusted operating profit and Adjusted operating
cash flow are as defined in the glossary on page 119.
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Positioned for Resilient Growth
Our
focus on …
… solutions
offerings and
partnerships …
Within the technology industry, there is a growing market for data erasure
solutions. An increased awareness of the use of data sanitisation software
instead of the physical destruction of assets has resulted in data erasure
becoming a preferred alternative.
Data security is also an important focus. The rise in employees working
from home following the COVID-19 pandemic has highlighted the need for
increased data security.
These considerations are expected to drive growth in our ITAD and Enterprise
markets as trading conditions normalise post COVID-19.
In addition, we are continuing to expand our network of blue-chip channel
partnerships, which includes Amazon Web Services (“AWS”), ServiceNow
and a number of partnerships with major Global Systems Integrators.
Our solutions offerings and partnerships, along with our strategic focus on
markets that have a growing need for our solutions, means that we are well-
placed to seize the opportunities that will further our sustainable growth.
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
… Environmental, Social,
and Governance ("ESG")
considerations …
… and research and
development …
We develop intellectual property and add resource to our Research &
Development division, thus improving our solutions offerings. Our focus
also includes research and thought leadership. This helps to ensure our
competitive advantage and provides us with resilience in the marketplace.
Environmental, social, and governance ("ESG") considerations and impacts are growing in
importance for organisations in today’s marketplace, which is driving a greater awareness
and use of our solutions. Our strong ESG credentials are highlighted in the following ways:
•
The use of data erasure software removes the need to destroy IT assets to protect the data
that is stored on them. This enables the asset to be resold, repurposed or recycled reducing
the significant carbon footprint from manufacturing the next generation of IT assets and
reducing e-waste.
•
Blancco recently announced that it has been verified as carbon neutral for 2021 having
purchased carbon credits in a wind power project in India to offset its carbon footprint.
Blancco has now committed to maintaining carbon neutrality, implementing
a decarbonisation plan and reducing its carbon intensity measures.
•
We focus on our employees’ training, engagement and well-being, and we are committed
to further improving diversity and inclusion within the Group. In addition, customers are
important to us, and we strive to meet their evolving needs. Driving best practice within
our industry is also a key consideration for us, so we work within the technical communities
to help establish standards.
•
Our Board is committed to promoting good governance and strong financial management
across the Group.
Read more about
our products | Pages 20-25
Read more about
our ESG | Pages 30-43
Read more about our
Investment Case | Pages 8-9
Read more about
our strategy | Pages 20-21
… positions us for long-
term sustainable growth
that benefits all of our
stakeholders.
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
At a Glance
Who we are
Blancco provides organisations with secure,
compliant, and automated solutions that accelerate
the transition to the circular economy.
With nearly 25 years of responding to customer needs and 42 patented
or patent-pending ideas, Blancco is the industry standard in data
erasure and mobile lifecycle solutions. Our dedication to technological
innovation empowers top-tier enterprises, IT asset disposition vendors,
and mobile industry stakeholders to protect end-of-life data against
unauthorised access, comply with data protection requirements, extend
the useable life of IT assets, accelerate operations and enhance the
mobile customer experience. Read more about us on our website.
Our mission
To deliver the highest quality technology and efficient
data management processes by leveraging our global
expertise in data and asset lifecycle solutions.
Our vision
To enable companies to responsibly manage their
data by erasing concerns for organisations worldwide.
Our culture
We believe in an environment where
people welcome and expect opposing
views, think on their feet and adapt
calmly to changing circumstances.
Environmental impact
Erasing data from devices using Blancco’s solution
negates the need to destroy IT assets at the end of life,
vastly reducing e-waste. The recycling of these assets can
significantly reduce the carbon impact of manufacturing the
next generation of equipment. Blancco announced in June
2022 that it had achieved carbon neutral status.
Blancco offers solutions for each
touchpoint along the mobile
lifecycle, serving OEMs, carriers,
retailers, insurance providers,
refurbishers and resellers:
• Automated diagnostics
accurately determine device
condition, support trade-ins
and insurance transactions and
reduce returns.
• Intelligent, tailorable workflows
accelerate processes for
high-volume erasure, grading
and market valuation before
device resale.
• Innovative app expands sales
and upgrade opportunities
outside brick-and-mortar
environments, improving
customer experience. .
Mobile
Blancco provides certified erasure
at scale for recyclable data storage
assets, increasing the number of
used drives and devices preserved
for resale.
With 20+ years of partnering
with ITADs, Blancco provides IT
recycling and remarketing.
organisations worldwide with
labour-saving solutions. These
accelerate end-of-life IT asset
erasures, grading processes,
device valuations and time to
market - minimising costs and
maximising returns.
ITAD
IT Asset
Disposition
Providers
Revenue by Division %
Our Markets
Enterprise
Public and private sector
enterprises must guard against
data vulnerabilities, comply
with numerous data protection
regulations, efficiently use
resources and incorporate eco-
friendly practices - all within a
complex portfolio of IT assets.
Our certified data erasure software
performs at scale, eradicating data
within active networks and across
IT assets, from fleets of devices to
multi-location data centres or
cloud storage.
Enterprise
38%
Mobile
27%
ITAD
35%
Read more on our culture |
Pages 30-43
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Where we operate
Revenue by Geography %
Who uses our products:
North America | 32%
Europe | 39%
Rest of World | 29%
Multi National Enterprises
Governments
OEMs
Mobile Carriers and Processors
IT Asset Disposition Companies
Service Integrators
Insurance Providers
Charitable Organisations
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Chair’s Statement
Maintaining
an agile
approach
As well as delivering on financial
expectations, there have been a
number of other developments
which have resulted in the Company
being in an even stronger position
and well set to secure further
sustainable growth.
Acquisition of WipeDrive Inc
Shortly before our financial year end in June 2022, we were
delighted to announce that we had completed the acquisition
of the US based supplier of data erasure software solutions,
WipeDrive Inc. WipeDrive had been operating in a similar market
to Blancco for over 20 years building up a customer base of
more than 500 organisations in the Enterprise and ITAD markets.
Along with the customer base, we were very pleased to welcome
selected members of the experienced WipeDrive team into the
Blancco group.
Carbon neutrality
In June 2022 we announced that Blancco had achieved
carbon neutral status for the 2021 calendar year. This initiative
involved a detailed scope 3 emission calculation, followed by our
employees selecting wind power projects in India to offset our
carbon footprint. As we look ahead at retaining carbon neutral
status in future, we are working towards reducing our carbon
footprint on an annual basis and aiming to involve all of our staff
in this work. Bonus payments to employees for the next financial
year will depend in part on the Company maintaining its carbon
neutrality and we are engaging with our teams around the world to
implement initiatives to reduce our carbon footprint.
Sustainability regulation
We have noted with interest, developments (particularly in the EU)
introducing regulation to encourage organisations to operate in
a far more sustainable manner. This arises primarily from the EU
Circular Economy Action Plan (CEAP) which encourages more
durable electrical goods and less waste.
We look forward to further details being released on this initiative
along with similar initiatives in other regions in due course.
I am pleased to be able to report to you,
that we have had another year of positive
momentum, where revenue and profits
have both demonstrated good growth
and we have maintained strong underlying
cash generation.
Rob Woodward
Chair
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Blancco Technology Group plc | Annual Report and Accounts 2022
One Global Team
Customer Focused Organisation
Innovative Technology
Honesty and Integrity
Professional and
Ambitious Workforce
Sustainability
Sales Team reorganisation
We begin the 2022/23 financial year with a new, energised Sales
management team in place, led by Jon Mellon. Within the first few
weeks, Jon has reorganised the Sales function and appointed
Maurice Uenuma as VP of Sales in North America and promoted
Fredrik Forslund to VP of Sales International. A comprehensive
pricing review has also been implemented and we are undertaking
a full review of our channel partner network to ensure we obtain
maximum value from that route.
With all of these developments, we look forward with great
confidence, but I would also like to take this opportunity to
express the gratitude of the Board to two particular individuals
who have been integral to the growth of Blancco over
recent years.
Firstly, our President of Global Sales & Marketing, Alan Bentley,
took the decision to retire with effect from 30 June 2022. Alan
has overseen several years of strong revenue growth across
the business. Running a Sales team spread from Melbourne to
California is a demanding role which Alan managed with great
expertise. We want to thank him for his important role in growing
the Company and wish him a very happy retirement.
I would also like to take this opportunity to thank Philip Rogerson
who was the Senior Independent Director at Blancco until he
stepped down from the Board in December 2021 due to health
reasons. Sadly, Philip died in May 2022. Philip provided valued
counsel and advice throughout his tenure on the Blancco board
and is greatly missed. We would like to express our sympathies
and gratitude to Philip’s family.
Finally, I would like to thank the loyal Blancco team who continue to
innovate and show incredible enthusiasm for their work. We have
emerged from the COVID-19 pandemic as a stronger company,
which is entirely due to the hard work of our dedicated employees
and they will continue to be the foundation for our future success.
Rob Woodward
Chair
Our Values
+9%
2022 | £39.8m
2021 | £36.5m
Revenue £m
+23%
2022 | £6.5m
2021 | £5.3m
Group Adjusted Operating Profit £m
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Investment Case
Blancco
has a unique
proposition
1
Unique Solutions
•
Data erasure solutions meet 25+ standards, along with
14 global certificates, approvals and recommendations
•
Constantly developing and improving our solutions
by developing new IP through R&D and collaborative
Partnerships
•
Innovation supported by 42 patents
Read more about our business model |
Pages 16-19
2
Strong Financials
•
Solid cash position
•
Balance sheet provides stability and opportunity for
investment
•
Significant revenue and profit growth year-on-year
Read more about our financial performance |
Pages 44-45
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
3
4
Growing Markets
•
Need for data erasure and data sanitisation solutions
is growing, due to growth in data and greater focus of
business models on digital processes
•
Growing use of mobiles and second-hand mobile market,
requiring data erasure and sanitisation solutions
Read more about our marketplace |
Pages 10-11
Targeted Growth Strategy
•
Strategy is focused on markets that have a growing need
for Blancco’s solutions
•
Strategy ensures Blancco will have leading positions in
these markets
Read more about our strategy |
Pages 20-25
5
Brand and Reputation
•
Blancco’s solutions are seen as the standard
in our industry
6
Read more in our ESG report |
Pages 30-43
A Sustainable Business Model
•
Blancco’s solutions enable the reuse and recycling of
IT assets while protecting sensitive data. The assets
would otherwise be destroyed and sent to landfill
•
Blancco has achieved verified carbon neutral status
and is MSCI A rated
7
Geographical Reach
•
Blancco is truly a global operation with offices in
17 countries and revenue being generated in over 65
•
Customer support is provided around the globe
Read more about where we operate |
Page 5
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Blancco Technology Group plc | Annual Report and Accounts 2022
Marketplace
Resilient
growth in the
marketplace
Personal, sensitive, and confidential data remain
the focus of both regulators and cyberthreats. The
transition to remote work and other marketplace
changes highlighted Blancco’s unique role in not just
protecting this data, but optimising tools and systems
for IT asset management, processing, and resale.
1
Context
•
Electronic waste management is a constant challenge, with the Global E-waste Statistics
Partnership reporting 53 million metric tonnes of e-waste produced in 2019
•
Mindful of excess waste, resource scarcity, and pollution effects, consumers and investors
continue to drive sustainable business practices with their wallets
•
While environmentally beneficial, ever-compact data storage and smaller devices
make extracting some components and natural elements more time consuming and
less profitable
Opportunities
•
The advent of 5G and COVID-related IT purchases are increasing amounts of stored data,
the number of devices being used - and the number of functional devices poised to enter
the secondary economy
•
With data protection intersecting with demands for greener options, secure data erasure
offers an appealing contrast to security-motivated asset destruction
Our response
•
Blancco has launched highly automated solutions to expedite device processing, valuation,
and redeployment; this facilitated faster, more secure, and more profitable opportunities for
enterprise, ITAD, and mobile
•
Blancco has increased the variety of assets that can be securely and efficiently erased,
including adding network device erasure capabilities that surpass traditional manual
processes in both speed and security
ESG
Trend
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Blancco Technology Group plc | Annual Report and Accounts 2022
Context
•
Cybercriminals matched the digital transformation to at-home working by increasing
phishing attempts and ransomware attacks
•
“Zero trust” became a buzz phrase, fueled by the SolarWinds breach that still affects US
government and private sector organisations; the attack highlighted criminal stealth, supply
chain vulnerabilities, and the need for more aggressive approaches to data protection
Opportunities
•
Defensive data lifecycle management requires an aggressive stance on shrinking the
amount of unnecessary data an organisation holds – even while data usage rapidly expands
•
Both cyberattacks and privacy regulations raise the urgency for putting effective data
erasure measures in place – both to remove unneeded data that could be accessed during a
breach and to comply with regulatory requirements
Our response
•
Blancco continued promoting automatic, remote erasure, based on enterprise policy, as part
of effective data lifecycle management
•
Strategic partnerships with AWS and ServiceNow put remote data centre, asset, and file
erasure at enterprise fingertips
•
By easing erasure across a broad set of scenarios, Blancco sets up enterprises for seamless
cloud migrations, well-documented regulatory compliance, and nearly effortless reduction in
no-longer-needed, breach-vulnerable, sensitive data
Context
•
Pandemic-sparked migration from office to home workspaces upended traditional ways of
keeping data secure
•
Skyrocketing demand for computing devices - PCs, laptops, tablets - bumped against
supply shortages
•
Tech support went remote, affecting employee hiring and separations, maintenance and
repairs, and other device end-of-life triggers
Opportunities
•
Rapid change left enterprises unprepared for the security risks of supporting a wide range of
assets “out in the wild,” beyond physical and administrative oversight
•
The IT purchasing surge boosted the sale of pre-owned devices and elevated awareness of
the second-hand market and the IT circular economy
•
Secure, data-free transport of IT assets became increasingly important as businesses
experienced employee transitions and device maintenance needs
Our response
•
Blancco highlighted the value of remote data erasure from any location, available to both
enterprises and ITADs, within live, non-office environments and across end-of-life assets
•
New device purchases predict a future uptick in device disposal; with increased automation
capabilities across all markets, we’re well positioned to equip clients to meet that influx
•
Blancco was also privileged to participate in the “Laptops For Kids” initiative, facilitating
secure device reuse by erasing donated assets for homebound students
2
Remote working
Trend
3
Cyber attack
evolution
Trend
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Against a backdrop of macro-
economic challenges over recent
years arising from Brexit, a pandemic
and now very high levels of inflation
in all of the major economies,
Blancco has been consistent in
delivering year-on-year increases
in revenue and profitability and
maintaining strong underlying
cash generation.
Business overview
The most recent year ended 30 June 2022 is further evidence
of this trend. The Group’s financial and operational progress
is supported by ESG initiatives that are driving changes in
behaviours from all organisations and data privacy concerns
that are affecting decision making at a Board level across the
globe. Measures taken by the management team in the last
year, particularly in relation to the Group’s ‘go to market’ strategy,
product suite innovation and the recent acquisition of WipeDrive,
position Blancco strongly to take further advantage of these
strong and enduring trends.
Enterprise
We continue to believe that the greatest growth opportunity for
the Company lies within the Enterprise market. We have stated
for several years that channel partners would represent an
increasingly large proportion of Enterprise revenues. Channel
partners are a key part of Blancco’s growth strategy as they
provide access to large blue-chip organisations that would
typically be more difficult for a company of Blancco’s size to sell
to. In FY18, the period when we set out Blancco’s growth strategy,
Enterprise was the smallest of the three markets that Blancco
served, with revenue of £8.6 million representing 32% of overall
group revenue. In FY22, Enterprise has become the largest of our
three markets, generating revenue of £15.4 million (38% of total
FY22 revenue), representing growth of £1.3 million versus FY21.
The acquisition of WipeDrive will further enhance our reach in the
market, with the business already contributing £0.4 million to FY22
revenues. In FY18, channel revenue in Enterprise was £3.6 million,
representing 38% of Enterprise revenues. In FY22, Enterprise
revenue from channel partners grew to £8.0 million, being 52%
of Enterprise revenues. We remain committed to a channel first
Chief Executive’s Report
Focusing on
our strategic
progress
Measures taken by the management
team in the last year, particularly in relation
to the Group’s ‘go to market’ strategy,
product suite innovation and the recent
acquisition of WipeDrive, position Blancco
strongly to take further advantage of
strong and enduring market trends.
Matt Jones
Chief Executive Officer
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
approach in Enterprise and anticipate this proportion of revenues
continuing to increase over the coming years.
The largest companies in the world are most affected by
regulation around sustainability and data protection. It has never
been acceptable for sensitive data held by companies to be
compromised and this is now accompanied by significant financial
penalties arising from the various data protection regulations that
are in place around the world. For example, it was reported by
DLA Piper that the total value of fines under the EU General Data
Protection Regulation (“GDPR”) in 2021 was US$1.23 billion (2020:
US$0.179 billion), including a record fine imposed on Amazon
of US$887 million. One option to deal with this issue has been
for companies to destroy any assets holding data by shredding,
incineration or similar destruction methods and indeed the vast
majority of assets used by organisations globally continue to
be managed in this way. The new raft of incoming sustainability
regulations will lead to the physical destruction of assets becoming
increasingly less acceptable and assets will need to be more
durable without compromising data security. Data erasure is the
most secure way of achieving that aim for electronically held data.
This growing opportunity has been recognised by the Company
and the expanded sales team described below will be increasingly
focussed on the Enterprise opportunity and in particular
extending the network of channel partners who will be able to
assist Blancco in accelerating its growth in future years.
IT Asset Disposition
Blancco’s ITAD customers operate as experts in the disposal of
end-of-life IT assets, primarily for companies which are smaller
than those which purchase licences directly from Blancco in
the Enterprise market. These customers saw a period of very
strong growth in FY22 as companies physically reopened offices
following the pandemic. There was a backlog of equipment which
reached the end of its life during the pandemic but that couldn’t
be disposed of until teams had returned to their offices. We also
saw a reconfiguration of office space which is accelerating the
move to flexible working and the increasing obsolescence of the
desktop PC and monitor set up which doesn’t lend itself well to
flexible working.
Blancco’s core ITAD revenue grew by 19% (23% adjusting for
currency movements) to £13.7 million (FY 2021: £11.5 million)
during the year, with WipeDrive adding a further £0.1 million of
sales since acquisition in June 2022. Whilst growth is expected to
slow modestly in the coming year as backlogs are cleared, this will
be offset by the trend for smaller companies as well as larger ones
to adopt more sustainable IT asset lifecycles.
£15.4m
2021 | £8.6m
Enterprise revenue
38%
of overall group revenue
which represents
Mobile
The second quarter of the 2022 calendar year was the fourth
successive quarter that had seen a reduction in new smartphone
sales according to the IDC. This is believed to be due to issues
relating to the pandemic which delayed product launches and saw
disruption in component availability and supply chain issues. Any
slowing of the market for new handsets leads to fewer phones being
traded in to offset the new handset cost. This reduces the volumes
of handsets being processed by Blancco customers with many
reporting a 10%+ reduction in volumes processed in comparison
to the previous financial year. As a result, revenue in Mobile fell by
2% to £10.6 million (FY 2021: £10.9 million) although this was a 2%
increase when movements in currency are adjusted for.
Approximately 50% of Blancco’s sales in the APAC region are
derived from Mobile, and therefore the slower recovery in Mobile
has affected this region in particular.
Looking forward, there are a number of trends that are expected
to support further growth:
•
Incoming EU regulation has a range of initiatives designed to
lengthen the life of mobile phones and tablets which will fuel
growth in the secondary market
•
Macro-economic conditions and the increasing cost of
new smartphones is likely to prompt increasing numbers of
consumers to purchase phones in the secondary market.
We therefore continue to have confidence that the Mobile market
will prove to be a good growth market over the medium term.
Acquisition of WipeDrive
We announced on 8 June 2022 that Blancco had completed
the acquisition of WipeDrive Inc for an initial consideration of
US$8.5 million and further contingent consideration of up to
US$1.5 million to be paid in cash in June 2023 subject to the
retention of its largest customers over the twelve-month period
following the acquisition. WipeDrive was previously known as
White Canyon Software Inc. before changing its name in 2021.
WipeDrive has a suite of similar software tools to Blancco and over
500 government and private sector customers in the ITAD and
Enterprise markets within North America and EMEA.
WipeDrive has been fully integrated into Blancco, with most
employees being given new roles within the enlarged group.
Our intention is to complete migration of all customers to a
single Blancco branded solution over the coming months. The
acquisition has led to a strengthened market position for Blancco
along with some proprietary technologies that will be integrated
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Chief Executive’s Report continued
with the Blancco solution to create an improved ‘best of breed’
solution in Enterprise and ITAD. The acquisition was immediately
earnings enhancing and we have already seen WipeDrive’s largest
customer renew for a further twelve-month period since the
acquisition took place.
Sales Team Reorganised and Strengthened
In March 2022, our President of Global Sales & Marketing, Alan
Bentley, announced his intention to retire at the end of June 2022.
Alan has led the Sales organisation through a period of prolonged
growth and has left the Company in very good shape for his
successor. We were delighted to announce Jon Mellon, who
started in June 2022, as Alan’s replacement. Jon has a long track
record of success working at technology companies and was
most recently the Chief Revenue Officer at Sonatype. Prior to his
time at Sonatype, Jon held a number of senior sales leadership
roles during a twelve-year tenure at NetApp. His most recent
position at NetApp was VP and General Manager of Americas
Commercial Sales in which he spearheaded the development and
execution of a strategy focussing on sales, system engineering,
and business development across a third of the Americas
operation and highest growth segment in the company. During his
tenure, NetApp doubled in size, a major feat given the scale and
complexity of a multi-billion dollar enterprise.
One of Jon’s first tasks for Blancco was to recruit a new VP of
Sales in the North America region, a role which has been filled by
Maurice Uenuma. Maurice has held a variety of roles in corporate
strategy, business intelligence and strategic sales at Perot
Systems and Dell and delved into cybersecurity through thought
leadership and program management roles at the Council on
Cybersecurity and the Center for Internet Security.
With both Jon and Maurice being based in the US, it was decided
to reconsider the structure of the other regions. As a result,
Fredrik Forslund has been appointed as VP of Sales in the
International region, covering both APAC and EMEA. Fredrik was
a co-founder and owner of SafeIT which was acquired by Blancco
in 2014. Fredrik has been an advocate of data erasure solutions
for over 20 years and is very well known and respected within
the industry.
This reorganisation and strengthening of the Sales organisation
has brought a new energy and expertise to the sales function
which will be well placed to take advantage of the market tailwinds
described above and lead to further periods of growth in the
coming years.
Positive environmental impact
As detailed in our ESG report, the use of Blancco’s solutions has
resulted in the erasure of data from millions of devices during the
year which meant that there was no requirement to destroy these
devices to protect data. This directly contributes to a reduction in
the generation of e-waste. Also, the recycling of IT assets enables
hardware manufacturers to make significant carbon savings from
manufacturing the next generation of IT assets. We are seeing
manufacturers increase efforts in this field, demonstrated by
Apple’s commitment to becoming carbon neutral across its
supply chain and products by 2030.
I am proud to say that Blancco has been even more proactive
in this field and has achieved carbon neutrality for 2021. We are
now in the process of implementing a decarbonisation plan to
reduce our footprint and improve each of our intensity measures
on an annual basis. As other organisations seek to achieve carbon
neutrality, they will be analysing their supply chains to ensure that
their suppliers have the lowest possible carbon footprint. The
management of their IT assets will be a key aspect of that analysis.
We are also at the early stages of seeing regulation introduced in
this area. As we saw with data protection regulation, this is being
led by the European Union (EU), and in March 2022 a package of
legislative measures was proposed in the CEAP. The legislative
package aims to make almost all physical goods in the EU market
more durable and therefore more environmentally friendly,
sustainable and energy-efficient throughout their whole lifecycle,
from the design phase to daily use, repurposing and end-of-life.
Social initiatives
The reality is that while Blancco has a solution which negates
the need to destroy IT assets, a concerning majority of all
IT equipment still ends up going to landfill. Blancco is proud
to support a number of charitable initiatives which focus on
redistributing assets to groups which can still obtain significant
value from such assets, despite them being no longer considered
of use by companies. An example of this comes from our work
with the Turing Trust, which approached us earlier in the year
to work with them, as they were facing challenges in obtaining
donated IT assets from companies due to security concerns.
They felt that being able to demonstrate that any donated devices
would be fully erased using Blancco software would give donating
companies confidence that the data stored on those devices
could not be compromised. Since launching with Blancco, there
has indeed been an increase in devices being donated which
are subsequently sent to schools in Africa. We work with other
charities to support underprivileged groups in the UK, Vietnam
& Australia.
£10.6m
2021 | £10.9m
Mobile revenue
US$8.5m
+contingent consideration of up to US$1.5m
Acquisition of WipeDrive
Read more in our ESG Report |
Pages 30-43
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All organisations seeking to improve their social impact can locate
groups where donated IT equipment would be gratefully received
and the use of Blancco’s data erasure solutions enables such
donations to be made without fear of data being compromised.
Governance (i)
The introduction of GDPR within the EU in 2018 has in turn led to
greater regulation of data around the world. Gartner forecasts that
by the end of 2023, 75% of the world’s population will have its
personal data covered by modern privacy regulations. As a result,
companies are spending increasing amounts on data protection
with Gartner forecasting that this outlay will reach US$15 billion
in 2024. Blancco’s solutions ensure that any data stored on IT
assets is permanently erased and cannot be breached when
that asset is no longer in the possession of the company that
previously owned it. There are also two particularly relevant pieces
of legislation coming through in the US, which we believe will
assist in driving further revenue:
•
California Privacy Rights Act (CPRA) – CPRA significantly
expands and amends the California Consumer Privacy Act
(CCPA) which took effect on 1 January 2020. CPRA will come
into effect from 1 January 2023 and is considered to be the
model that many other US states will follow in due course.
The amendments introduced by CPRA will bring data privacy
regulation much closer to GDPR.
•
Cybersecurity Maturity Model Certification (CMMC) – is an
assessment framework and assessor certification program
designed to increase the trust in measures of compliance to
a variety of standards published by the National Institute of
Standards and Technology (NIST). The regulation applies to
all contractors to the United States Department of Defense
and will in many cases require those contractors to ensure
that data is fully erased to NIST standards before any media or
equipment leaves the possession of a contractor. This must
be certified by an assessor and will mean that offsite physical
destruction is no longer adequate. These regulations are
expected to be implemented in mid 2023.
Governance: EU regulation (ii)
In recent years we have seen the implementation of GDPR which
was enforceable from May 2018. This has been followed by similar
regulation in most other parts of the world. We are now seeing the
EU lead the way again with environmental regulation arising from
the CEAP. There are a number of initiatives in this regulation which
we anticipate will drive demand for Blancco solutions:
•
The upcoming Ecodesign Working Plan will set out regulatory
measures for electronics and IT including mobile phones,
tablets and laptops under the Ecodesign Directive so that
devices are designed for energy efficiency and durability,
reparability, upgradability, maintenance, reuse and recycling;
•
Focus on electronics and ICT as a priority sector for
implementing the ‘right to repair’, including a right to update
obsolete software;
•
Regulatory measures on chargers for mobile phones and
similar devices, including the introduction of a common
charger, improving the durability of charging cables, and
incentives to decouple the purchase of chargers from the
purchase of new devices;
•
Exploring options for an EU-wide take back scheme to return
or sell back old mobile phones, tablets and chargers;
•
Review of EU rules on restrictions of hazardous substances in
electrical and electronic equipment and provision of guidance
to improve coherence with relevant legislation, including
REACH 24 and Ecodesign.
All of these initiatives are designed to extend the life of IT
assets and reduce e-waste for the benefit of the environment.
Alongside this is the draft Corporate Sustainability Reporting
Directive (CSRD) which is expected to come into force in 2023
with reporting in 2024. This Directive is likely to require large EU
companies, or EU subsidiaries of large companies (namely entities
meeting two of the following three criteria: net turnover of €40
million; balance sheet assets greater than €20 million; and more
than 250 employees), and certain small enterprises, to report
against their environmental and social impact.
It isn’t unusual, as we saw with GDPR, that the EU leads the way
with regard to regulation and it is anticipated that many other
parts of the world will follow suit as pressure increases on all
organisations globally to operate in a more sustainable manner.
Summary and Outlook
While FY22 has been a further period of strong growth in revenue
and profit, and strong underlying cash generation we believe there
are a number of reasons to expect continued strong growth in
future periods, across all measures:
•
Regulation is increasingly being implemented to motivate
companies to operate more sustainably and produce less
waste;
•
The acquisition of WipeDrive further improves the market
position of Blancco and breadth of our solutions; and
•
The newly strengthened Sales management team is expected
to have an immediately positive impact with a particular focus
on Channel sales growth.
With a strong pipeline of opportunities as we enter the new
financial year, the Board remains confident of delivering further
periods of increased value for shareholders.
Matt Jones
Chief Executive Officer
With a strong pipeline of
opportunities as we enter the
new financial year, the Board
remains confident of delivering
further periods of increased
value for shareholders.
Matt Jones
Chief Executive Officer
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Creating
value for our
stakeholders
Our key resources:
Expertise
Over 20 years’ experience
of providing data erasure
software solutions
Intellectual property
42 patents granted or filed
Locations
Global reach with offices in
17 countries
Accreditations
Software tested, certified, and
approved by 14 governing bodies
around the world
Testing capabilities
Mobile diagnostics solution includes
over 50 automated tests to find
errors on all Android and iOS
mobile devices
People
Experienced team of 300+
employees worldwide
Business Model
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Our key activities:
Our competitive advantages:
Value created for our stakeholders:
1
Focused on research, development
and thought leadership
Utilising our thought leadership we
develop our solutions and products
We market and sell these products
and solutions
We build and maintain relationships
with our partners and customers
We utilise the revenue from our
solutions to reinvest back into our
thought leadership
2
3
4
5
Breadth of coverage
Approach data erasure as an integral part of
the information lifecycle management process,
helping enterprises of all sizes meet their
security and compliance needs
Customer base
A growing and loyal global customer base
Significant barriers to entry
Growing patent portfolio and regional
certifications widens the gap
Investing in innovation
42 patents now either granted or filed
Certifications
Blancco data erasure solutions have been
tested, certified, approved and recommended
by 14 governing bodies and leading
organisations around the world
Experience
Over 20 years of providing leading data
erasure solutions
Quality
ISO 9001 and ISO 27001 certified
development centres
Employees
The opportunity to work for a
growing, market leading, experienced
business with global operations
Customers
Our 2500+ customers gain secure,
auditable solutions, innovative
products and peace of mind that
enable them to meet their
regulatory requirements
Investors
Opportunity to create significant
value from a growth business
End users
the knowledge that their data has
been completely erased, the ‘right to
be forgotten’ (Article 17, GDPR)
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Business Model continued
Mobile
device
journey
With both new and used smartphone sales
predicted to continue growing globally (Gartner,
IDC), Blancco is well positioned to serve mobile
OEMs, carriers, retailers, insurance providers,
refurbishers, and resellers. Our innovative mobile
solutions are built on more than 25 patented or
patent-pending ideas, providing unparalleled data
protection, end-to-end processing and sales
efficiencies, and new ways to lower costs and
reach untapped markets.
With the advent of 5G connectivity and widespread telework
habits, consumers are expected to increase demand for new
mobile devices. Related trade-ins will fuel the secondary device
market, creating a once-a-decade “super cycle.”
At the same time, suppliers along the device lifecycle need to
reach new markets, reduce labour costs, increase customer care,
and deliver more precise and convenient outcomes.
This creates fertile soil for automation, transparency, and remote
service delivery along each step of the mobile device journey:
new device purchase, value-added purchasing, ongoing customer
service, end-of-life data erasure, and used device processing. In
this final stage, multiple options exist, including preparing used
devices for redeployment or resale – and restarting the mobile
device journey.
1
Step
2
Step
New device purchase
Value-added purchases
Blancco simplifies buy-back/trade-in (BBTI)
programmes that incentivise in-store and
online device purchases. Automated workflows
speedily assess device condition and trade-in
value and wirelessly transfer content from old
device to new - in-store or remotely. Precise
assessments and lock-removal solutions also
reduce rejections by warehouses and OEMs,
increasing BBTI reimbursement.
Most consumers turn down insurance at
first. Yet Blancco’s mobile app provides
a low-risk, high-reward way to reach the
uninsured remotely with post-sale enrollment
opportunities and on-the-spot device
assessments - that’s whether a device is
two days old or on its second life. And, when
it comes to insurance payouts, Blancco’s
efficient and accurate on-device identification
and assessment tools help clients significantly
reduce the risk of fraudulent claims.
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3
Step
4
Step
5
Step
Customer service
End-of-life data erasure
Used device processing
Post-sale customer care is easier when
intuitive, on-device diagnostics tools
auto-validate device condition against
both OEM specifications and repair/
return/exchange policies. With objective
assessments, immediate support can
often reduce unnecessary returns for
retailers and manufacturers. Qualified
returns can be easily initiated from the
user’s device or via a browser.
Blancco safely and completely erases user
data from devices before return or trade-in,
protecting consumers and businesses from
having data breached after devices leave their
care. Erasure is certified and documented by
device ID specifications, then noted as part of
the history of that particular device.
When mobile processors take in a significant
volume of used devices (e.g. from trade-
ins or returns), operational efficiency is
crucial. Blancco solutions automate erasure,
diagnostics, and grading. This cuts labour
costs, expedites processing, and results in
faster, more objective decisions on component
harvesting, recycling, or redeployment into the
circular economy.
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Strategy and Progress
Enterprise
A financial summary of our three end-user
markets is provided in our KPIs | Pages 26-29
Read more about our strategy in action |
Pages 22-25
Blancco has
a worldwide
footprint…
… to sell to and service its target markets
and all three markets have an immediate
need to buy Blancco’s products due to
various trends, including regulation,
environmental, security risks and technology
change. This expansion will be generated
through direct sales and increasingly indirect
channels via our international partners.
Key objectives
•
Increase revenues through the
development of indirect sales
channels, comprising both OEM
and channel partners
•
Broaden channel partner base
with the introduction of new
blue chip partners such as AWS,
ServiceNow, Deloitte
•
Continue to develop intellectual
property to provide a best in
class solution for customers
Performance
•
Revenue increased by
9%
to £15.4 million
(2021: £14.1 million)
•
Channel sales increased by
23%
to £8.0 million
(2021: £6.5 million)
•
Channel sales now represent
52%
of Enterprise sales
(2021: 45%)
•
Acquisition of WipeDrive further
strengthens market position
Commentary
•
The Group will continue with the
existing strategy over the coming
years to enable organisations
to cope with the increasing
regulatory burden being placed
upon them
•
Environmental regulation is
in the early stages of being
implemented in the EU which is
designed to reduce e-waste
•
Stakeholder pressures on
organisations to improve their
position on sustainability should
lead to data erasure becoming
a preferred alternative to the
physical destruction of assets
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Mobile
ITAD (IT Asset Disposition):
Key objectives
•
Create a leadership position in
the Mobile Asset Lifecycle space
by providing a broad range of
software-based processing
solutions that reach across the
three markets sectors of Carrier,
Retailer and Third-Party Logistics
•
Increase market share by
targeting small to mid-sized
customers
Performance
•
Revenue of
£10.6 million
(2021: £10.9 million) decreased
2% however excluding foreign
exchange movements grew by
2% compared to last year.
•
Blancco Xcelerate launched to
provide a fixed fee solution for
mid-sized mobile processors
Commentary
•
Supply chain challenges have
led to a reduction in the number
of new handsets being sold and
therefore reduced the number
of handsets being sold in the
secondary market
•
Economic conditions are likely
to lead to reduced disposable
incomes for consumers which will
have an uncertain impact on the
secondary mobile market
Key objectives
•
Retain market leading position in
ITAD market
•
Gain increasing market share in a
moderately growing market
Performance
•
Revenue increased by
20%
to £13.8 million
(2021: £11.5 million)
Commentary
•
The post pandemic return to work
has led to an increase in IT assets
being disposed of
•
Increased remote working,
resulting from the COVID-19
pandemic, has increased the
quantity of hardware in circulation
which should lead to more
devices requiring to be sanitised
by organisations
•
Stakeholder pressures on
organisations to improve their
position on sustainability should
lead to data erasure becoming
a preferred alternative to the
physical destruction of assets
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Strategy in Action
Enterprise
Being sustainable
The implications are vast: Certified
data erasure enables used devices to
feed the circular economy in a way that
reassuringly protects business and
consumer data. It therefore encourages
enterprises to make more sustainable
decisions when they retire used
equipment. It supports corporate social
and environmental initiatives. And, in this
case, it sets up future generations for
economic wellbeing.
This matters to enterprises. As Hassan
Bahrani, the infrastructure and mobile
service implementation manager for
donor company Thirteen said, “It was
heart-warming to see images of the
students using our old equipment
to boost their education. Not only is
recycling the equipment providing
opportunities for young people who
might not otherwise have access to
digital skills, but it has positive
environmental benefits too.”
The positive effects of today’s data
erasures will ripple far into the future.
Case in point: Turing Trust is a UK charity that
provides IT resources and teacher training to
schools in sub-Saharan Africa. Since partnering
with Blancco, the charity has securely erased and
refurbished more than 2,500 donated desktops,
laptops, smart phones, and tablets, which in
turn, are used to equip students to access online
learning and gain technical skills.
Our community
engagement initiatives:
‘Laptops for All’ - England
Turing Trust – Africa
Ethan Indigenous – Australia
Dariu Foundation – Vietnam
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For the past couple of years I
have taken on the responsibility
around sustainability and
all things ESG within the
organisation. I have been really
enjoying it; the ESG part of
the business over the last two
to three years has become a
bigger and bigger focus for our
customers, which has caused
us to look internally at our own
sustainability and motivated us
to achieve carbon neutrality.
Adam Moloney
Chief Financial Officer
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Strategy in Action continued
Increase efficiency
Software-based
data erasure is
more secure
than physical
destruction.
1
Stage
Enterprise IT reaches
end of life
2
Stage
Policy compliance
is required
3
Stage
Security & efficiency
are key
4
Stage
Sustainability is
increasingly influential
•
To combat breaches at device
end-of-life, enterprises, ITADs, or
service providers often destroy the
IT assets themselves.
•
This is a tactic grounded in outdated
beliefs and policies.
•
Destruction undermines ESG
efforts and can leave data at risk
during storage, transport, and when
destruction is misapplied.
•
Data erasure preserves devices
while removing the data and
certifies compliance with data
protection regulations.
Situation
•
Physical destruction is most
commonly the preferred method of
data destruction within IT policies
due to (a lot of) enterprises believing
it’s the most secure method – this
doesn’t meet with ESG goals, and is
for the most part, an outdated and
unnecessary process.
•
Enterprises require the policy (and
its communication throughout the
organisation), knowledge, skill and
resource to conduct the software-
based erasure either within their
own staff, or via a 3rd party (service
provider/ITAD).
•
If software-based erasure is used,
a certificate of erasure for each
device acts as the best form of
guaranteed security / audit trail a
company needs to be compliant
with policy – and the kit can be
released for further use after it’s
been erased.
•
Large enterprises can easily host
tens of thousands of data storage
devices globally.
•
Many of these devices are used
to store and process sensitive
business and customer information.
•
Data remaining after devices
are decommissioned can cause
irreparable reputational and
financial harm if breached.
•
This makes correct disposal of
servers, computers, mobile devices,
and other assorted IT assets a
critical security concern.
Situation
•
Data needs destroying before kit
leaves the organisation (to avoid a
data leak / hefty fine / reputational
damage etc.)
•
ESG / sustainability goals are
increasingly pushing for EOL
kit to be pushed back into
circular economy
•
Global enterprises and ITADs
need fast, seamless, and secure
sanitisation processes.
•
Unlike with physical destruction,
data erasure can begin as part of
decommissioning, reducing the
need to hold data-filled assets.
•
Automation cuts error rates,
validates compliant processes,
and verifies erasures.
•
This delivers scalable, end-to-end
efficiency – and absolute
data security.
Situation
•
Enterprises that follow software-
based erasure processes need a
speedy, automated process if they
are handling batches of kit at a time.
•
The same requirement is required
if a SP/ITAD are handling the kit.
•
Process efficiency is paramount
in ensuring kit moves through
the stages of erasure quickly and
efficiently, whilst ensuring absolute
security of the device.
•
ESG initiatives, climate concern,
investors, and customers are urging
enterprises to adopt eco-friendly
business practices.
•
Data erasure provides 100-percent
data protection while keeping
devices intact.
•
This frees organisations to
confidently contribute used assets
to the circular economy rather than
destroy them.
•
Secure reuse of data assets
minimises e-waste and slows the
need for resource mining.
Situation
•
Investors and company owners
are pinpointing goals around ESG /
sustainability.
•
One way an organisation can show
they are sustainable is to recycle
their kit and avoid it going into
landfill and adding to the
E-waste crisis.
•
Software-based data erasure is
the only way EOL devices can be
securely and efficiently erased, with
the devices intact for further use.
Read more in our ESG report |
Pages 30-43
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We speak with our colleagues
all the time! We’re constantly
engaging with them around
different aspects of the
employee experience, whether
it be wellbeing, benefits or,
this year, our new Volunteer
Day programme. I think we
have created an environment
where employees feel able to
approach our Leadership Team
about anything, and we are
really proud to have been able
to cultivate this relationship.
Sarah Smith
SVP Human Resources
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Key Performance Indicators
The Group has a range of
performance indicators, both
financial and non-financial,
to monitor and manage
the business and ultimately
to improve performance.
The Group’s key performance
indicators (KPIs) are
outlined below.
1
Revenue
(£’millions)
Geography
(Regional proportion of revenue)
Market type
(Proportion of revenue)
Definition
Revenue comprises amounts contracted and delivered to
customers in accordance with the accounting rules prescribed
by IFRS15.
Why we measure it
Revenue is a key indicator in how the business is growing and
revenue is the primary source of cash generation for the Group.
Commentary
Revenue has grown 9% in the year and 9% on a compound basis
over the past 3 years, reflecting a growing customer base and high
retention rate of key customers.
2
Definition
The proportion of revenues generated in each of our regions.
Why we measure it
It is important for the Group to maintain high levels of diversification
across the world, allowing us to benefit from any opportunities in a
particular regions, for example through new legislation, and also
de-risking the business from any economic downturn in one region.
Commentary
The Group has maintained strong revenue generation in all regions
over the last four years, with each region generating underlying year
on year growth over this time period.
Definition
The proportion of revenues generated by each of the market types
in which our customers operate.
Why we measure it
It is important for the Group to monitor how both the customer base
and technological market is evolving over time to ensure appropriate
direction of product development and management focus.
Commentary
Each customer market continues to show constant currency growth
year on year, with the fastest growth in recent years observed in
enterprise and data centre, as organisations continue to both generate
data and raise their awareness of the importance of data management.
Our constant currency mobile growth has been modest in the last 12
months due to market slow down however remains a key focus area.
North America
Enterprise
Europe
ITAD
Asia and ROW
Mobile
3
2022 |
2021 |
39.8
36.5
33.4
30.5
26.9
2020 |
2019 |
2018 |
2022 |
2021 |
32%
30%
31%
35%
35%
2020 |
2019 |
2018 |
2022 |
2021 |
38%
39%
35%
34%
32%
2020 |
2019 |
2018 |
2022 |
2021 |
39%
37%
37%
37%
37%
2020 |
2019 |
2018 |
2022 |
2021 |
35%
31%
33%
33%
32%
2020 |
2019 |
2018 |
2022 |
2021 |
29%
33%
32%
28%
28%
2020 |
2019 |
2018 |
2022 |
2021 |
27%
30%
32%
33%
36%
2020 |
2019 |
2018 |
* where data not provided a like for like calculation of the KPI is not available.
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End of year headcount
Adjusted operating profit
(£’millions)
Operating profit/(loss)
(£’millions)
Definition
Operating profit stated before acquisition costs, exceptional
income, share-based payment charges and amortisation of
acquired intangibles.
Why we measure it
This is the key profitability metric for the Group and shows the
underlying performance of the Group adjusted for any non-cash
charges or any items that are exceptional in nature.
Commentary
The Group has demonstrated strong profitability in FY22 as revenue
continues to grow, and due to certain costs such as travel &
entertainment remaining below pre-pandemic levels. Over the past
three years, adjusted operating profit has increased 86%, or 23%
annually on a compound basis, representing year on year growth of
operating profit margins.
Definition
Operating profit/(loss) shows the total returns from core operations,
stated before finance costs, taxation and any profit from
discontinued operations.
Why we measure it
This shows the overall profitability of the Group after all operational
costs and income is accounted for.
Commentary
Increased revenues in the year and cost controls have resulted in an
increase in profitability.
Definition
The number of employees engaged in each area of the business.
Why we measure it
The Group’s long-term strategy is centred around ensuring the
appropriate level of resource committed to product, to ensure a
high level of ongoing development, and sales to ensure we are able
to execute effectively on customer opportunities.
Commentary
The Group has maintained a core product team, which grew in 2019
following the acquisition of Inhance. The sales team has continued
to grow year after year to promote growth across all of our operating
locations and to support a ramp in sales in many emerging countries
for Blancco.
6
2022 |
2021 |
£6.5m
£5.3m
£4.0m
£3.5m
£2.9m
2020 |
2019 |
2018 |
2022 |
2021 |
£1.9m
£1.8m
(£0.0m)
£0.1m
(£0.8m)
2020 |
2019 |
2018 |
Admin
2022 |
2021 |
49
51
49
44
43
2020 |
2019 |
2018 |
R&D
2022 |
2021 |
121
119
120
104
88
2020 |
2019 |
2018 |
Sales
2022 |
2021 |
170
155
143
124
112
2020 |
2019 |
2018 |
4
5
*
where data not provided a like for like calculation of the KPI is not available.
Read more about our financial performance |
Pages 44-45
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Key Performance Indicators continued
Assets Securely Erased (millions)
Estimated Landfill Waste Prevented (kg)
7
Definition
The estimated number of assets erased per year, using
Blancco data erasure products.
Why we measure it
This metric allows us to track and observe how the market is
shifting between different types of media. We also use this
to track the positive environmental impact of our products,
allowing us to estimate the amount of hardware saved
from landfill.
Commentary
There has been a significant increase in the volume of laptops
and desktops undergoing erasure by Blancco products.
Definition
The estimated weight of hardware that is saved from landfill each
year as a result of using our software, as these assets are able to
be repurposed each year rather than being scrapped.
Why we measure it
This metric allows us to track the environmental impact of
our product.
Commentary
We continue to see a significant saving in kg terms of diverting
assets from landfill.
Laptops
Loose Drives
Desktops
Smartphones
Servers
Tablets
TOTAL
8
2022 |
2021 |
11.7
9.5
8.7
2020 |
2022 |
2021 |
2.7
3.3
3.1
2020 |
2022 |
2021 |
2020 |
74.0m
68.2m
60.7m
2022 |
2021 |
3.7
3.2
3.1
2020 |
2022 |
2021 |
32.1
35.6
20.1
2020 |
2022 |
2021 |
0.6
0.8
0.7
2020 |
2022 |
2022 |
2021 |
2021 |
2.0
52.8
2.1
54.5
0.5
36.2
2020 |
2020 |
* where data not provided a like for like calculation of the KPI is not available.
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Number of customers
Employee location
Definition
Number of active customers in each of our markets.
Why we measure it
The Group tracks customer engagement, renewals and spend
volumes year on year to maintain focus on high customer service
and to ensure we are retaining key customers year after year. The
Group aims to increase its customer base year on year as we raise
awareness to the market of the benefits of data erasures.
Commentary
The number of customers has grown at a compound rate of 9% in
the last three years, in line with revenue growth.
Definition
Geographical location of our staff, split proportionally by region.
Why we measure it
The Group must have a diverse workforce to support its customers
and key stakeholders, and also help to drive forward the business in
response to changing market conditions.
Commentary
The Group continues to grow its headcount, with the proportion of
staff in North America increasing after the acquisition of WipeDrive
in June 2022.
Enterprise
Europe
ITAD
APAC
Mobile
North America
9
10
2022 |
2021 |
1,770
2,038
1,427
1,429
2020 |
2019 |
2022 |
2021 |
48%
49%
48%
44%
45%
2020 |
2019 |
2018 |
2022 |
2021 |
594
561
482
446
2020 |
2019 |
2022 |
2021 |
35%
37%
37%
40%
41%
2020 |
2019 |
2018 |
2022 |
2021 |
222
218
196
145
2020 |
2019 |
2022 |
2021 |
17%
14%
15%
16%
14%
2020 |
2019 |
2018 |
* where data not provided a like for like calculation of the KPI is not available.
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ESG Report
Supporting
the circular
economy
Sustainability sits at the core of
Blancco’s business proposition, as
our data erasure software enables
the reuse of unwanted IT hardware,
supporting the circular economy.
The value of this offering is only
being strengthened as we see
more companies setting emissions
reductions targets and interrogating
their resource use and supply
chains. The innovations we are
making in our products and services
further bolster our ability to support
customers in achieving their own
ESG objectives, and in the past
year Blancco has won two industry
awards for sustainable innovation.
Alongside the growth of Blancco’s impact story, our approach to
ESG risk management internally has continued to mature. This
year we completed our first comprehensive greenhouse gas
("GHG") emissions baseline assessment. We made the decision to
offset our entire footprint for 2021 and achieved carbon neutral
status following the purchase of carbon credits for two renewable
energy projects.
Our ultimate goal is to become a net zero business. Armed with a
greater understanding of our own carbon footprint, we have been
able to set our first decarbonisation targets, and we will reassess
the effectiveness of these targets on an annual basis as we
identify areas in which we can reduce our emissions.
Sustainability sits at the core of
Blancco’s business proposition,
as our data erasure software enables
the reuse of unwanted IT hardware,
supporting the circular economy.
Matt Jones
Chief Executive Officer
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Our products and expertise mean we are well
placed to support individuals beyond Blancco
as well. We have partnered with several charities
around the globe to bridge the digital divide
for many underprivileged groups by facilitating
much-needed access to electronic devices,
as well as providing skills training. We also
recognise our responsibility to support progress
in our industry, and share our expertise through
membership of industry associations, speaking
on data erasure and sustainability on webinars
and at events, and publication of research.
At Blancco there is absolute recognition
for the value of operating responsibly, and
this is exemplified by the announcement of
our membership of the UN Global Compact
this year. We are engaged with ESG risk
management at the highest level of the
business, with our CFO continuing to drive
forwards our agenda with the support of our
external ESG and carbon consultants.
The following report discloses a summary of
our actions in ESG this year, while our 2022
ESG Report will provide greater detail on
our approach and initiatives, as well as full
performance data.
Matt Jones
Chief Executive Officer
Consistent with our commitment to sustainable
growth and future-proofing our business, and
from listening to our investors and stakeholders,
we have progressed our alignment to the
recommendations of the Task Force on
Climate-related Financial Disclosures. This
year we conducted a qualitative scenario
analysis to establish the Group’s exposure to
climate-related risks and opportunities, and
we have continued to embed climate change
considerations into our thinking at Board and
Management level.
It is the dedication and hard work of people
that drives our business. Making sure our
colleagues remain motivated and engaged is
therefore integral to our continued success,
and we endeavour to listen to and meet their
expectations whenever possible. This past
year we have increased our focus on mental
health and wellbeing, ensuring everyone is
getting the support they require. By introducing
a hybrid working model, we have been able
to accommodate employees who need
flexibility in their schedules, but not at the cost
of engagement; I am very pleased that our
employee engagement score of 84% presents
another increase on the previous year.
Attracting the best candidates and nurturing
talent internally remains a key facet of our
recruitment approach, and ongoing training
and development opportunities are available
across the Group to ensure colleagues can get
the most out of their roles. At the same time,
diversity and inclusion is a focus area for the
business, especially being in an industry where
women in particular are underrepresented. When
recruiting new talent, we are keen to access the
most diverse pools of candidates available, to
promote diversity of thought in our business,
and this year we have seen an increase in the
number of women in management roles.
MS C I
A
CCC
B
A
AA
AAA
BB
BBB
ESG RATINGS
Introduction
This report represents a summary of our
ESG management and performance. For
a full understanding of our approach,
please see our 2022 ESG Report which
will be published in the Sustainability
section of our website.
In disclosing our ESG management and
performance, we are guided once again by
the Sustainability Accounting Standards
Board (SASB) in reporting upon the most
financially material information. Whilst it is
not a mandatory requirement for the Group
to report against the recommendations of
the Task Force on Climate-related Financial
Disclosures (“TCFD”), we are committed
to assessing the potential impact of
climate-related risks and opportunities
on the business and providing clarity
and transparency on these matters for
our stakeholders.
This year we announced our membership of
the United Nations Global Compact (UNGC),
a voluntary leadership platform for the
development, implementation, and disclosure
of responsible business practices. We also
continue to assess our impact in support
of the UN Sustainable Development
Goals (SDGs).
We speak to investors, as well as other
stakeholders, following the publication of our
annual ESG Reports to receive feedback and
understand how they want to see our
reporting progress. This investor input is
another consideration in our reporting
and has informed developments in this
year’s report.
As this is our third year of detailed ESG
reporting, we now have three years of data
for many metrics, enabling assessment of
progress and demonstrating our positive
direction of travel. We have included some
highlights in this Annual Report, while full data
sets can be found in our 2022 ESG Report.
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ESG Report continued
For the past couple of years I have
taken on the responsibility around
sustainability and all things ESG
within the organisation. I have been
really enjoying it; the ESG part of
the business over the last two to
three years has become a bigger
and bigger focus for our customers,
which has caused us to look internally
at our own sustainability and really
drove us around the announcement
of carbon neutrality.
Adam Moloney
Chief Financial Officer
Environment
Our product offering
By providing a data erasure solution that negates the need to
physically destroy and send to landfill electronic devices that
they have no further use for, Blancco’s software is supporting
companies to make more sustainable choices. Instead these
devices, now securely erased of all data, can be reused, sold, or
donated, supporting a transition towards the circular economy.
During FY 2022, Blancco’s software enabled the secure data
sanitisation of 52.8 million devices, the pre-use carbon footprint
of which was 6.1 billion kg. This represents a huge proportion of
devices that can be reused, rather than sent to landfill.
Whilst data erasure is at the core of our product and service
offering, we continue to improve and innovate. By both
implementing efficiencies within existing products as well as
introducing new diagnostic solutions, we have expanded our
offering by providing sustainable solutions for more customers
and a greater variety of use cases. This year we completed the
initial development of our ESG Dashboard which calculates these
figures. In FY 2023 we will launch phase 2 of this process, which
will show customers their own performance regarding these data
points, and will further bolster our ESG proposition.
Our carbon footprint
At Blancco we are firmly committed to operating in a sustainable
manner, with consideration for the resources we use and the
impact we have on the environment. We have been placing
greater scrutiny on our own environmental footprint. In 2021
we engaged a consultancy to assess and calculate our carbon
footprint. This covered the Group’s entire value chain GHG
emissions, including Scope 1, 2 and 3. By gaining this fuller
understanding of our emissions, we have been able to take
significant steps in reducing our environmental impact. Foremost,
acknowledging that reducing our emissions will take time, we were
still keen to offset that footprint in the first instance. We therefore
took the decision to purchase carbon offset credits, verified to the
Verified Carbon Standard, and were able to achieve carbon neutral
status for 2021.
Emissions
Year*
Scope 1 & 2 (tCO2e)
Scope 3
(tCO2e)**
Total
2019
152.95
949.20
1,102.15
2020
104.05
148.46
252.51
2021
198.5
3,422.80
3,621.30
* Please note that GHG emissions and energy consumption are reported
according to the calendar year, not financial.
Our electricity usage for CY 2021 was 291,664 KwH. Whilst
offsetting our footprint presents a short-term solution, our
broader objective is to reduce our emissions and define a net
zero strategy. Commensurate with this, and enabled by greater
insight into our footprint, we have set our first interim, annual
decarbonisation targets. We have calculated three intensity
metrics which reflect key emissions drivers: emissions per square
metre of office space, emissions per employee and emissions per
£1 million revenue, and will attempt to decrease each by at least
1% by the end of 2022.
15.8
tCO2e/FTE
-1%
target
1.4
tCO2e/m2
-1%
target
143.9
tCO2e/£1m in revenue
-1%
target
Intensity-based decarbonisation targets
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ESG Report continued
Approach to climate-related issues
Whilst reporting upon our approach to climate-related matters
is not mandatory for the Group, through engagement with
stakeholders, and in particular investors, we recognise the desire
for clear information and discussion on climate change and
business resilience. On this basis we have aligned our disclosures
to the four pillars of the TCFD; Governance, Strategy, Risk
Management, and Metrics and Targets.
Governance
Board oversight
To ensure effective governance of climate-related issues in the
business, it is important that there is oversight of these matters
at the very top of the Group. The Board of Directors is informed
about climate-related risks and opportunities via the Audit
Committee, which holds responsibility for oversight of all climate-
related matters and reports to the Board frequently throughout
the year. Further, the Board, which meets eight times per annum, is
kept appraised of progress on all climate-related matters through
the CFO, who is a Board member. The Board will be responsible for
assessing progress of decarbonisation targets.
The Group recognises climate change as a relevant risk, and
the Board updated the risk register to include climate risk,
but presently the Group considers it to be of low risk to the
business over the short, medium, and long term (time horizons
defined below).
Concurrently, climate change presents a clear opportunity
for the business to support customers as they tackle their
own emissions. By enabling the secure erasure of data from
hardware, our products negate the need for physical destruction
and sending to landfill of IT equipment and encourage reuse or
reselling. E-waste is a significant source of emissions, and as
office-based companies become more aware of their emissions
footprint, Blancco’s product and service offering for sustainable
disposal of equipment will be a positive commercial driver for
the Group.
Climate-related issues are considered in reviewing the Group’s
annual budgets; we contracted consultants to baseline our
Scope 1, 2 and 3 emissions profile, and purchased carbon
credits to attain carbon neutrality status. Group performance on
ESG metrics, including those relating to climate, are linked to all
employee remuneration.
As we maintain the firm belief that Blancco’s products and
services have a role to play in managing e-waste and supporting
the circular economy, climate-related opportunities are clearly
factored into our business strategy. By attaining carbon neutrality
status, we are able to promote Blancco’s proposition in a new
light. Conscious that many of our clients are defining their own net
zero pathways, we want to demonstrate our commitment to this
action and believe this will support the marketing and business
development activities of the Group.
Management’s role
The CEO and the CFO, both of whom sit on the Board, take
management responsibility for climate-related and ESG matters.
The CEO is responsible for the strategic direction of the
business, of which climate change is an influencing factor,
whilst the CFO is responsible for overseeing all ESG-related
activity, including managing relationships with Blancco’s ESG
and carbon consultants.
Management is informed about and actively monitors climate-
related issues through materials, meetings, seminars and
presentations via Blancco’s various corporate advisors. These
advisors include climate, ESG, broking, legal, accounting, UNGC,
and property management, and the Executive frequently engages
with Buchanan, the Group’s retained ESG advisor.
Strategy
The TCFD recommends considering climate-related risks and
opportunities over three time horizons. Blancco has established
the following: short-term, 1-3 years; medium term, 3-10 years; and
long term, over 10 years. These time horizons take into account
the useful life of the Group’s assets, key being our IT equipment
which is invested in over a 3–5-year cycle.
Whilst climate risk to the Group is considered low, Blancco has a
presence in 15 countries around the world, which presents the
risk of disruptive weather events potentially causing difficulties for
the business.
Blancco participates in industry associations across the globe,
in the jurisdictions where it has a strong presence. Whilst many
of these associations recognise e-waste as a global issue
that requires action, not all have a public position on climate
change. Those that do – and Tech UK and the Research Institute
of Innovative Technology for the Earth (RITE) are leaders in
this regard – have a clear view and support the findings of the
Paris Agreement and that action by all is required. Blancco is
in agreement with these views and, as a founding member of
the International Data Sanitization Consortium (IDSC), co-wrote
an open letter to the President of COP26 appealing for more
consideration to be afforded in tackling the issue of e-waste.
The impact of climate-related risks and opportunities on the
business, strategy and financial planning have been outlined
below as part of our scenario analysis. We find that climate-related
risks would have no material financial impact on the Group. There
has been adjustment in the Group’s strategy to accommodate
greater recognition of climate risk and how it is assessed,
resourced, and communicated to stakeholders. The Board,
Executive and working groups will continue to monitor climate-
related matters.
Scenario analysis
The focus of Blancco’s Decarbonisation Strategy is on ensuring
that the Group plays its part in delivering the carbon reductions
that are needed to mitigate the worst consequences of climate
change. The net zero by 2050 target, capturing Scope 1, 2 and
3 emissions, is in line with the IPCC scenario intended to keep
global warming to below 1.5°C.
In terms of the resilience of Blancco’s Decarbonisation Strategy,
the scenario analysis that has been undertaken so far, taking
into account a 2°C or lower scenario, suggests that the Group’s
carbon reduction programme should serve to mitigate many of
the ‘transitional risks’ associated with climate change (for example,
increasing legislative, financial and reputational pressure on
businesses to reduce carbon emissions).
The physical risks associated with climate change are focused
on our office locations around the globe, with the incremental
changes and sudden disruptions from extreme weather (from
flooding to excessive heating or cooling) being fully integrated into
our risk identification, assessment and management processes.
As the experience and understanding in this area matures,
the scenarios employed to test the resilience of Blancco’s
Decarbonisation Strategy will shift to take a more systematic
and quantitative approach. This will further enable us to appraise
the effects of climate-related physical and transitional risks on
our operations.
The annual review of performance will further provide the Group
with decision-useful information against which its strategy may
be modified.
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The less than 2°C scenario
The less than 2°C scenario assumes that we act responsibly, in line with business
and society globally, to reduce GHG emissions. This may include the introduction of
carbon pricing by national governments. In this scenario, we expect that transition
risks pose the biggest threat to our business, with only a limited and manageable
impact on our operations from physical risks.
Risks
Opportunities
Short term
Higher transition risks associated with moving
to a low-carbon economy
•
Reputational risk with investors, customers and employees,
if we do not adequately address climate change.
•
Compliance risk if we fail to meet regulatory requirements,
including emissions reporting obligations.
•
Increased cost of climate-related levies/ increased pricing
of greenhouse gas emissions.
•
Travel curbs.
•
OEMs, driven by regulation, to increase recycled materials for the production of hardware.
•
EU-led regulation driving increased management and reduction of e-waste that will likely impact global
legislation, particularly in our key markets.
•
Customer awareness and development of circularity strategies to reduce e-waste will drive increased focus on
Blancco’s product and service offering.
•
Customer awareness over energy costs linked to data centre usage may encourage stricter policy
development regarding data storage, management and erasure, also driving demand for our product.
•
To enable hybrid working practices, customers may increase investment and management of their IT
infrastructure to support carbon reduction efforts. We believe this will drive demand for higher quality IT and
data management to ensure mobile devices are secure.
Medium term
•
OEMs, driven by regulation, to further increase recycled materials for the production of hardware.
•
EU-led regulation driving further increased management and reduction of e-waste that will likely impact global
legislation, particularly in our key markets.
•
A continuation of the opportunities under the short-term time horizon.
Long term
•
Our ability to provide Circular Services by ourselves will help us to differentiate, as customers will expect these
services to be integrated into more of the technology products and services they procure.
•
Customers will require our advice on the selection and deployment of technology products, to help them
achieve their carbon reduction strategies.
•
A continuation of the opportunities under the short- and medium-term time horizons.
Higher transition risks associated with moving
to a low-carbon economy
•
Increasing reputational risk with investors, customers
and employees, if we do not adequately address
climate change.
•
Continuing compliance risk if we fail to meet regulatory
requirements, including emissions reporting obligations.
•
A continuation of the risks under the short-term
time horizon.
Less significant increase in physical risks under
this scenario, but still present
•
Continued isolated extreme weather events causing
manageable direct business disruptions to office locations,
and impacts to suppliers in our moderate supply chain.
•
Higher summer temperatures and rapid changes in
temperature and humidity causing challenges for data
centre cooling, and increases in energy costs to control
office environments.
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ESG Report continued
The more than 2°C scenario
The more than 20C scenario assumes climate policy is less effective and emissions
cause climate change above that envisaged in the Paris Agreement. Under this
scenario, we would expect physical risks to become much more apparent in the
longer term.
Risks
Opportunities
Short term
Slight increase in transition and physical risks
in the short term
•
Isolated and manageable business disruptions caused by
extreme weather events, such as flooding or drought.
•
Ad-hoc supply chain interruptions.
•
Increased insurance costs due to natural disasters.
•
Slowed growth rates as market does not set demand for
Blancco products and services.
•
Our ability to supply our products locally in multiple regions (UK, EU, North America and APAC) will help large
international customers to reduce shipment costs and the associated carbon footprint. This international
coverage will also increase our resilience and help us provide greater supply chain resilience to our customers.
Medium term
•
Our opportunities are the same as under the short-term time horizon but would be slower in adoption.
Long term
Increasing physical risks due to a failure to adequately
transition to a lower-carbon economy
•
Flooding due to increased sea level (no strategic locations
are at material risk).
Increased physical risks due to a failure to adequately
transition to a lower-carbon economy
•
Flooding due to increased sea level (no strategic locations
are at material risk).
•
Pandemics due to new diseases caused by climate and
population changes.
•
Population changes – controls on population growth,
increasing migration, the need for automation etc.
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Risk Management
Climate change has been included as a risk in the Group’s risk
register and undergoes the same level of scrutiny as all other
risks. The risk register is reviewed on a quarterly basis by the
Executive Management Team and every six months by the Board,
with updates made as necessary. Material risks are scored for
the likelihood and impact of each being the greatest risk to the
company. The Group describes on the register the warning
mechanism in place should any of the risks materialise and the
mitigating action that is currently being taken to prevent the risk
from arising.
For further details on how the Group assesses risk presented by
climate change, please see the scenario analysis above.
Metrics and Targets
Measuring our performance
Climate-related issues are not considered material at this point
in time. Blancco believes that it has a firm appreciation of the
transition risks that may impact the business and that it has the
right controls, risk management oversight, and support from its
external advisory network. Physical risks do not presently impact
the business, nor have they impacted the supply chain. Given the
nature of our business and services provided by key actors within
our supply chain, we do not perceive a major risk in the short- or
medium-term.
Nevertheless, we are committed to running our business
responsibly and creating a culture across the organisation that
values our planet and the resources we use every day. We have
therefore linked ESG metrics, including those relating to climate,
to all employee remuneration.
To address potential climate-related opportunities, we track our
positive impact through the number of devices we securely erase
and the weight in hardware that does not need to be physically
destroyed and sent to landfill. In FY 2022 we completed the initial
development preview of our ESG Dashboard, which calculates the
number of devices we have enabled the secure erasure of (and
will include customer specific data when phase 2 is launched in
FY 2023).
In 2022 we engaged a carbon consultant, Avieco, to conduct
a baseline assessment of our GHG emissions. Through this
exercise, Avieco were also able to externally verify our Scope 1,
2 and 3 emissions.
Setting targets
It is the intention of the business to set a net zero target, in line
with or in advance of the aims of the Paris Agreement. In FY 2022,
we undertook a number of steps on the journey to setting
the target.
The calendar year of 2021 marks the first year of Blancco
measuring its Scope 1, 2 and 3 emissions footprint. This was,
however, an abnormal year in that the travel restrictions that
resulted from the COVID-19 pandemic were still prevalent. As
such, the emissions profile for Blancco in 2022 is likely to shift
in several ways: business travel and employee commuting are
expected to increase from 4.2% and 0.9% of total emissions
respectively whilst home working emissions may decrease
from 2.6%.
As we begin to understand what emissions look like over a typical
year, the business will set interim, annual decarbonisation targets
that focus on improving its emissions intensity. Presently the
Group is seeking a 1% reduction in intensity of Scope 1, 2 and
3 emissions on an annualised basis through incremental gains.
We have calculated three intensity metrics which reflect key
emissions drivers: emissions per square metre of office space,
emissions per employee and emissions per £1 million revenue.
Blancco will explore new decarbonisation targets for 2023
and beyond.
Concurrently, the Group is working to devise a more robust
decarbonisation programme, which will require input from a
variety of external parties, including landlords and suppliers. The
objective is to set quantifiable targets in 2024 once a full year of
post-pandemic trading has taken place.
To facilitate the reduction of carbon emissions across
our operations, we have established the following
decarbonisation plans:
•
Engage with landlords to improve data quality and explore
sustainable technologies such as rainwater harvesting and
renewable energy tariffs
•
Encourage less carbon intensive forms of business travel
and commuting practices
•
Engage with the top 15 goods and services suppliers
to improve reporting accuracy and explore more
sustainable solutions
•
Explore emissions performance at Board-level, with overall
responsibility to sit with the CFO
-1%
on an annualised basis through
incremental gains
Scope 1, 2 and 3 emissions
As we begin to understand
what emissions look like
in a more typical year, the
business will set interim,
annual decarbonisation targets
that focus on improving its
emissions intensity.
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Upholding inclusivity is essential to our
business, as we really want to make
sure we have the most diverse level of
thinking. And to achieve this, we need
to be accessing a candidate pool that
is as diverse as possible. We have been
doing a lot to address inclusivity in our
recruitment practices, and diversity is
a constant consideration when we are
hiring new talent.
Matt Jones
Chief Executive Officer
ESG Report continued
Social
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Diversity & Inclusion
Increasing diversity and inclusion (D&I) at Blancco is a key
focus for the business. As an equal opportunity employer, we
are committed to maintaining open and supportive working
environments for all our colleagues around the world. This
commitment starts at Board level, with D&I initiatives being led
and championed by our CEO.
Over the past two years we have introduced a host of initiatives
and conducted reviews of existing practices with the objective
of improving diversity and ensuring inclusivity. As such, we are
pleased to see these efforts beginning to come to fruition.
We have seen a small increase in the number of women in
management positions across the Group this year and we
will continue to enable and strive for a more diverse and
inclusive workforce.
Employee training and development
We continue to enhance our training and development offering for
employees, as we are focused not only on attracting and retaining
talented individuals, but also providing them with the opportunity
to thrive in their roles and expand their skillsets. As such we
provide a wide range of training opportunities for our colleagues
at all levels of the business.
Our e-learning platform, Blancco Learning, acts as a hub for
our training opportunities, which has around 500 courses for
employees to choose from to voluntarily undertake, whilst we also
provide employees the opportunity to undertake external training,
from short courses through to full programmes that lead to the
attainment of specific qualifications.
We provide bespoke training for managers at Blancco to ensure
they are best placed to succeed in their roles and lead their teams.
We introduced the Management Development Programme, aimed
at developing the confidence of those new to managerial roles
and building upon the existing knowledge of more experienced
individuals. Furthermore, to maintain a strong pipeline of talent
that is key to the continued success of our business, we utilise
succession planning to identify individuals with high performance
and potential, for whom we can provide appropriate training to
support their career pathway.
The Group maintains strong ties with universities, especially
in Finland and India, where we speak at careers events, attend
recruitment days, and offer internships for current students and
graduates to raise awareness for our business and bring talented
individuals onboard.
We speak with our colleagues all the time!
We’re constantly engaging with them
around different aspects of the employee
experience, whether it be wellbeing,
benefits or, this year, our new Volunteer
Day programme. I think we have created
an environment where employees feel able
to approach our Leadership Team about
anything, and we are really proud to have
been able to cultivate this relationship.
Sarah Smith
SVP Human Resources
Gender representation
Percentage of gender representation:
2021
2022
(1) management
20% women
21% Women
(2) technical staff
21% women
21% Women
(3) all other employees
42% women
42% women
Racial/ethnic representation
Percentage of racial/ethnic representation:
2021
2022
(1) management
95% White,
5% Asian
95% White,
5% Asian
(2) technical staff
50% Asian,
49.5% White,
0.5% Caribbean
51% White,
48% Asian,
0.5% Black,
0.5% Caribbean
(3) all other employees
64% White,
32% Asian,
2% Black,
1% African,
1% Hispanic
66% White,
31% Asian,
1.2% Black,
1.2% Hispanic,
0.5% African
Employee engagement
As we moved beyond pandemic restrictions in the past year, the
way we communicate with our colleagues evolved to suit our
current working practices. Whilst we continue to host HR Country
Calls and our All Hands Calls, a significant change from FY 2021
is our ability to host many more in person social events this year,
from welcome drinks to team building days. It has been fantastic
to see the enthusiasm from colleagues for getting together and
enjoying being able to meet face-to-face.
The Global Employee Forum comprises a group of enthusiastic
individuals from across the business. Their meetings are hosted
by the CEO and the SVP Human Resources to enable a direct
line of communication between employees and the Executive
Team. The employee engagement survey is our key measure of
employee satisfaction across the Group. We are very proud to
have seen another significant increase in the engagement score,
which was 84% for FY 2022. Our employee awards programme
recognises the dedication and effort our colleagues put into their
work, and winners and nominees continue to be announced on
our All Hands Calls.
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ESG Report continued
Wellbeing and benefits
With the pandemic and lockdown restrictions sharpening
societal focus on mental health and wellbeing, we are keen that
this is reflected within our organisation as well. In FY 2022 we
launched our new reward, recognition and wellbeing platform,
the Hub, through which we host our benefits offering. The Hub
provides a wide variety of discounts and offers for retail stores
that employees can utilise, and managers can now provide
team members with monetary rewards to be redeemed through
the platform. We have a Save As You Earn (SAYE) share option
scheme available in all locations with ten or more employees.
The Hub has also been used to promote all of our wellbeing
resources. We have run a number of mental health-focussed
events to provide more touchpoints for employees to receive
support and reach out with concerns. For Mental Health
Awareness Week in particular we ran interactive sessions on
topics including learned optimism, self-motivation, the importance
of laughter, and coping sessions; we hosted discussion groups
on men’s mental health and being a working parent; and we
organised outdoor events at all our locations to encourage
colleagues to get outside and do an activity together.
Community engagement
As a responsible business, we want to give back to the
communities where we operate. We also want to make sure that
we are providing support in the most effective way possible,
utilising our products and skillsets. We partner with several
organisations across the globe to improve access to technology
for underprivileged groups, providing licences to be used to wipe
donated devices and offering skills training.
This year we supported the following organisations: ‘Laptops for
All’ to provide devices to children in the North of England; Turing
Trust, to facilitate technology-enabled education and teacher
training in sub-Saharan Africa; Ethan Indigenous to promote
equal opportunities to young Indigenous Australians; and Dariu
Foundation to provide rural schools and disadvantaged children
in Vietnam with free-of-charge rentals of donated laptops
and desktops.
Our approach has gained recognition from the industry as we
have been nominated for several ‘Tech for Good’ awards. In FY
2022, Blancco was shortlisted at the CRN Tech Impact Awards,
Better Society Awards, The Stack’s Tech for Good Awards, and
the Global Business Tech Awards.
To encourage our employees to get involved in communities
activities and be able to champion causes personal to them,
we launched a new Volunteer Day programme this year as well.
This enables employees to take a paid day off every year to do
voluntary work of their choice. A number of employees have taken
advantage of this opportunity so far, using the day to support
initiatives that are close to their heart, and we will continue to
promote this offering in the coming year.
In FY 2022 we launched our new reward,
recognition and wellbeing platform,
the Hub, through which we host our
benefits offering.
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Governance
The Board is entirely engaged with our
ESG programme and the progress that it is
yielding. It is a core theme for the company.
And I think we all see that while our ESG
approach is about doing the right things
for the right reasons, there is also a real
enhancement to the value of the business
by doing what we are doing.
Rob Woodward
Chair
The Company’s ESG reporting and
management is owned by the Board
of Directors and the Board is united
in its understanding that advancing
Blancco’s ESG agenda is the correct
and necessary course of action.
Adam Moloney, Chief Financial Officer and Executive Director,
leads the Company’s ESG strategy and ESG matters are an
integral part of his report in Board meetings. Matt Jones, Chief
Executive Officer, has led the charge on championing D&I
initiatives within the Group. The CEO and CFO have executive
responsibility for ESG management and information flows to
the Board so they are regularly updated. The Group engages
with third-party advisors to consider Blancco’s ESG approach
and strategy.
Business ethics
To ensure effective governance of ethics issues, there are
multiple layers of oversight. This includes the Board of Directors
(in particular the CFO), the Audit Committee, and the
legal department.
Our policies lay out the expectations and responsibilities for all
personnel and reflect the high standards of ethical behaviour
that the Group sets. The policies we have in place apply for all
employees, including part-time staff and contractors (and apply
to all WipeDrive employees following our acquisition of the
company this year), to ensure that everyone is held to the
same expectations.
Training on Group policies is mandatory for all employees,
including part-time employees and contractors. We provide
training to all new joiners and we conduct refresher training for
employees every two years for our Code of Business Conduct,
Anti-corruption and Bribery Policy, Whistleblowing Policy, Modern
Slavery Policy, and Data Protection Policy. For Information
Security, we conduct annual training via short webinars,
awareness campaigns and frequent notices. We utilise our online
platform Blancco Learning to deliver this training.
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Blancco Technology Group plc | Annual Report and Accounts 2022
ESG Report continued
Data privacy and IT security
We sell data erasure software to businesses, who utilise our
technology to securely sanitise their electronic devices. Blancco
itself does not handle any of the end user data, and only holds
minimal data on the businesses we sell to. Nevertheless, we place
the highest importance on respecting and protecting the privacy
and confidentiality of the information that our customers share
with us. Maintaining our target of zero data breaches in FY 2022
speaks to the robust policies and processes we have in place.
This best practice approach to IT security, following ISO 27001
standards we use various technologies aimed to protect our IT
infrastructure and data. Our user base is the best defence we
have for ensuring security of our systems and data, and therefore
we place a great emphasis upon the education of everyone in
the Group, with all employees completing training on data privacy
and cybersecurity. To measure awareness within our user base,
we have conducted two test scenarios during FY 2022, and the
results indicated strong cybersecurity awareness among Blancco
employees and certainly surpass other leading companies in the
industry against which we have benchmarked our performance.
However, we recognise that improvements can always be made
and ongoing awareness campaigns are required to keep IT
security at the forefront of everyone’s minds.
Delivering for our customers
Our technology not only supports the circular economy and
negates the need for physical destruction, but it also enables
our customers to meet their own sustainability objectives. Our
erasure software ensures that our customers’ data is secure and
enables compliance with information security standards such
as the GDPR, whilst also allowing customers to redistribute or
donate securely wiped devices and avoid sending hardware to
landfill, supporting social and environmental goals. In FY 2023 we
will launch the second phase of our ESG Dashboard, which will
include customer specific data on the number of devices they
have erased and therefore enabled their reuse.
Our solutions can reduce environmental impact for other use
cases, by providing remote diagnostics that avoid the need for
transportation and other solutions that facilitate reuse or reselling.
Additionally, the development of machine learning technology that
detects cracked glass on devices has enabled us to support large
insurance providers to validate the state of a device for an after-
sale insurance policy and thereby prevent fraud.
It is through engaging with our customers that we are continually
able to meet their evolving needs and deliver the highest quality
service. We engage with our customers on an ongoing basis;
through our sales engineers, account managers and regional
leaders we speak to our customers all the time to understand
what they need; we have an online support portal to support
customers if they have questions about our products and
services; and we use our Customer Advisory Board to seek and
receive feedback to refine our strategy and focus.
Our primary measure of customer satisfaction is the Net
Promoter Score (NPS); this year we saw a five-point increase in
our NPS alongside a rise in respondent numbers, demonstrating
sustainable growth of the business, as we are meeting customer
demand whilst expanding. Another measure of customer
satisfaction is the Win Loss Survey which we offer any new clients
or lost prospects the opportunity to complete. To create better
oversight of these feedback channels, account managers are now
able to see whether a customer has completed either survey and
the profile links to their responses so the manager can more easily
review feedback and quickly understand whether there is anything
to be addressed.
62.0
2021 | 57.5
Customer NPS score
348
2021 | 283
Number of participants
Industry participation
For continued industry progress, both from a technological
advancement and a sustainability perspective, we must share our
expertise. Blancco continues to hold memberships in industry
organisations around the world. Our contribution to these
organisations varies from submitting content for their websites
and newsletters, to attending in-person and virtual events, and
(in the case of IDSC) overseeing the direction and vision of
the organisation.
Being recognised for our expertise in data erasure and mobile
lifecycle solutions, we are often called upon to speak on the
subject. For the 25th Anniversary of the Information Technology
Agreement in September, our President of Global Sales was
invited by the World Trade Organisation to speak on ‘The use of
data protection technology in an ICT circular economy’. This year
alone, our CFO has also spoken on a number of webinars on the
impact of Blancco’s product offering and the Group’s internal ESG
journey to carbon neutrality.
The overall strategy that is used involves
a layered system featuring ‘best-of-breed’
technologies in the industry – any time
we are looking to add a new technology,
we carefully review whether it is a good
fit for Blancco.
Jesse Kittleson
VP Global Support and Information Technology
Customer Net Promoter Score (NPS)
2020
2021
2022
Q1 Score
41
60
60
Q1 Number of respondents
17
55
75
Q2 Score
35
60
68
Q2 Number of respondents
17
78
82
Q3 Score
46
60
61
Q3 Number of respondents
22
75
107
Q4 Score
63
50
58
Q4 Number of respondents
29
75
84
FY Score
48
57.5
62
FY Number of respondents
85
283
348
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Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Chief Financial Officer’s Report
Strengthening
our financial
position
Revenue
Organic revenue growth in FY22 was 11% excluding the impact
of foreign exchange movements, corresponding to full year
revenues of £39.3 million. The acquisition of WipeDrive on 8
June 2022 generated an additional £0.5 million of revenue in
the period, with the consolidated Group generating revenues of
£39.8 million, 9% growth including foreign exchange movements.
This represents a strong end to the year for WipeDrive following
the renewal of its largest customer in June 2022.
(£’millions)
Year ended
30 June
2022
Year ended
30 June
2021
Growth
rate
Organic
growth
rate
CER
growth
Revenue (£ millions)
39.8
36.5
+9%
+8%
+12%
Revenue by geography
North America
12.6
11.2
+12%
+8%
+11%
EMEA
15.6
13.4
+16%
+16%
+20%
Asia and ROW
11.6
11.9
-2%
-2%
+4%
Revenue by market type
Enterprise
15.4
14.1
+8%
+6%
+10%
ITAD
13.8
11.5
+20%
+19%
+23%
Mobile
10.6
10.9
-2%
-2%
+2%
Growth in ITAD revenue was particularly strong in the year with
companies and economies opening up following the pandemic
and catching up on a backlog of assets that reached end of life
during lockdown periods. Much of this increase in ITAD activity
was seen in the EMEA region leading to a particularly strong
period of revenue growth in this territory.
Profitability Measures
Gross profit margin increased from 92% to 97% due to the
elimination of costs relating to third party mobile diagnostics
software which, for some customers, is bundled alongside the
core Blancco technology. The Group has developed its own
solution to perform these diagnostics, and as such these costs
have reduced significantly versus the prior year. Cost of sales is
now largely comprised of hardware, where the customer’s use
case may require a physical platform on which to perform the
diagnostics and erasures of their equipment and media. However,
this revenue stream continues to represent a minority of the
Group’s overall sales volume.
Our customer retention has been excellent, with 100% of all
customers of £100k and above renewing contracts from 2021
to 2022. Across all customers spending over £5k in 2021, the
average contract value, representing revenues both recognised in
the year and contracted in future years, increased by 14%.
Our growth in ITAD revenue was
particularly strong in the year with
companies and economies opening up
following the pandemic and catching
up on a backlog of assets that reached
end of life during lockdown periods.
Much of this increase in ITAD activity
was seen in the EMEA region leading to
a particularly strong period of revenue
growth in this territory.
Adam Moloney
Chief Financial Officer
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Blancco Technology Group plc | Annual Report and Accounts 2022
+9%
2022 | £39.8m
2021 | £36.5m
Revenue £m
+23%
2022 | £6.5m
2021 | £5.3m
Group Adjusted Operating Profit £m
Adjusted operating profit for the period increased by 23% to
£6.5 million (FY 2021: £5.3 million). Operating profit for the period
was £1.9 million (FY 2021: £1.8 million). Adjusted operating
margins grew from 14% in the prior year to 16% in FY 2022. This
was achieved through improvement in revenue gross margins
as noted above. This was offset by an increase in travel costs
following the easing of the pandemic restrictions and some wage
inflation, particularly among our software development team.
Year ended
30 June
2022
£000
Year ended
30 June
2021
£000
Operating profit
1,882
1,774
Acquisition costs
542
–
Exceptional income
–
(837)
Amortisation of acquired intangible assets
2,683
2,859
Share-based payments charge
1,387
1,490
Adjusted operating profit
6,494
5,286
Adjusted EBITDA for the period grew by 13% to £11.5 million
(FY 2021: £10.2 million), giving an adjusted EBITDA margin of
29% (FY 2021: 28%).
Cash Flow
Operating cash flow reduced from £10.3 million to £9.9 million
which was impacted by a strong billing period leading up to year
end resulting in a large receivables balance at year end compared
to the prior year. The majority of this debt has already been
collected in Q1 2023 with the Group continuing to be exposed to
low credit risk.
Adjusted operating cash flow remained flat at £10.8 million,
corresponding to a cash conversion on adjusted EBITDA of 94%
(2021: 106%).
Balance Sheet
Net funds fell to £6.2 million (30 June 2021: £10.1 million).
This reduction was caused by two major cash outflows:
•
£7.2 million arising from the consideration and costs of
the acquisition of WipeDrive in June 2022
•
£1.5 million to purchase Blancco shares for the Employee
Benefit Trust in December 2021
A liability of £1.3 million has been provided for in the balance
sheet in respect of the contingent consideration of up to
US$1.5 million that could potentially become due to the vendors
of WipeDrive in June 2023, plus a small amount relating to a
working capital adjustment paid in August 2022.
R&D Expenditure
The Group continues to invest a significant amount in research
and development (“R&D”), with expensed R&D costs totalling
£1.2 million (2021: £1.1 million) and capitalised development
costs totalling £4.1 million (2021: £4.2 million).
The R&D team has grown over the last 24 months both organically
through ongoing investment and as a result of acquisitions of
businesses, resulting in new development centres in Ireland
and the US, albeit at a smaller scale than our existing footprint
in Finland and India. They continue to focus on appraising and
transitioning the technology associated with the WipeDrive
product, as well as its patent portfolio, to determine where there
are various product and platform enhancements that will further
augment the core Blancco product offering.
WipeDrive
The acquisition of WipeDrive has been immediately earnings
enhancing, contributing revenues of £0.5 million and adjusted
operating profit of £0.4 million in the period between acquisition
and year end. The integration of the business into Blancco has
been positive with the employees working on roles spanning
our combined North American operation. As the business has
operated mainly in the ITAD and Enterprise markets, the pooling
of the WipeDrive and Blancco resources has happened naturally
and quickly, and many customers are now renewing contracts on
Blancco products.
Adam Moloney
Chief Financial Officer
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Blancco Technology Group plc | Annual Report and Accounts 2022
Principal Risks and Uncertainties
The Board is responsible for determining
the nature and extent of the risks it is willing
to take in delivering Blancco’s strategic
objectives and manages these risks through
the Blancco Risk Management Framework.
The strategic risk appetite for the business is reviewed annually by
the Board. The Audit Committee is asked to assess whether risks
are within the Group’s risk appetite.
Key leadership employees and functional managers have been,
and will continue to be, involved in the risk identification process,
and with support from the Risk and Opportunities Committee,
risks are identified and recorded, along with the causes and
consequences. The Committee is balanced with representatives
from all operating locations and functions in order to provide a
comprehensive aggregation of the Group’s risks.
In identifying exposure, consideration is given to both external
factors, arising from the environment and sector in which we
operate; and internal factors, arising from the nature of our
business, our controls and processes and our decision making
and other processes.
Each risk is evaluated based on its likelihood of occurrence and
severity of impact and positioned on a risk ranking matrix, along
with proposed mitigating factors. Following the assessment and
recording of risks, appropriate responses are proposed based
on its positioning within the Group’s risk appetite; i.e. whether to
tolerate, treat, or terminate the risk to the Group.
Appropriate actions are agreed; for example, to mitigate,
transfer (through insurance), or eliminate (by ceasing) the risk.
The objective will be to continually challenge the efficiency and
effectiveness of controls.
Principal risks
It is recognised that the Group’s strategic objectives can only be
achieved if risks are taken seriously and managed effectively. The
risks below are those considered key to delivering our strategy
and are specific to the nature of our business, although there are
other more generic risks which may exist and which may impact
the Group’s performance.
Taking
responsibility
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Blancco Technology Group plc | Annual Report and Accounts 2022
Risk area
Potential impact
Mitigation
Trend
Staff engagement is essential to the successful delivery
of service to customers, and longer term, the overall
business strategy. A workforce which is not engaged
or motivated can hinder the growth of the business.
Having the appropriate capabilities at all levels, by
continuing to attract and retain key individuals within
the business is key to our strategic growth.
Additionally, a number of our staff have specialist
skills, for example in software engineering. A shortage
of these skilled staff (resulting from either employee
turnover, or failure to attract staff) would result in the
business not possessing the level of technical expertise
required to execute on its strategic objectives, in
particular the ongoing development of the product.
A lack of diversity and inclusion within the workforce
risks limiting creativity and ideas that would have
an impact on operations and decision making.
This may result in sub-optimal strategy, unbalanced
focus across the Group’s markets and mis-focussed
product development.
Considerable effort has been devoted to
communicating the business strategy so employees
are clear on our business objectives and their role in
the strategy.
We highlight key capability gaps and work to recruit
appropriately and efficiently to fill such gaps.
Alongside this we perform periodic reviews of
employee remuneration to ensure this is set at a
competitive level, including our key individuals to
ensure we retain these staff members.
We keep a record of the key individuals in the
organisation and identify a succession plan for key
roles, so that we are able to promote internally as well
as sourcing talent externally.
We continue to monitor the diversity of our
employees and review recruitment practices to
encourage diversity and inclusion. We continue to
conduct diversity and inclusion training for our staff
to promote the benefits of working as a diverse and
inclusive organisation.
We have introduced a group wide employee reward
and recognition platform which allows managers to
easily reward employees who demonstrate the values
of the Group and highlight their contributions to their
colleagues across the business.
The risk is unchanged.
The Group has invested in human resource
management and initiatives over the last few years
and continues to monitor its performance in this area
across locations.
Following the COVID-19 pandemic and the shift
to hybrid/remote working in some locations we
have continued frequent regional employee
communications to ensure employees maintained
their engagement and are kept up to date with
economic developments.
The Group feels that its key employees are well
engaged and there is a continued focus on succession
planning to ensure that business interruption arising
from any key staff turnover can be mitigated and
transitioned as smoothly as practically possible.
Accordingly, the Group deems the employee
engagement risk to be reduced to a suitably low level
and we have seen a low level of employee churn within
our senior leadership team, following several years with
no change in senior leadership.
Employee
capabilities and
engagement
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Blancco Technology Group plc | Annual Report and Accounts 2022
Risk area
Potential impact
Mitigation
Trend
The business faces further challenge in price
competition for less highly developed products which
can result in price erosion or customer loss.
The business also faces the impact of global political
pressures and the resulting challenge of rising costs
due to supply chain issues and significant rates of
inflation which could reduce our operating margin,
as well as the ability to attract and retain staff given
growing wage inflation pressure.
There is a risk that the Group will not be able to
execute on channel partnerships, and therefore
not be able to take advantage of highly scalable
revenue opportunities.
The software sector is fast moving with regular changes
in technological advancements and offerings.
This may impact the future compatibility of our
products, or new solutions could even render our
products obsolete.
The product integrity of the Blancco offering is
important in the markets we operate within. A failure
of the product could result in reputational damage or
regulatory pressure. As our offerings are used within
customers’ IT systems there is a risk of malicious
or erroneous code being embedded into their
IT environment.
Obtaining new patents, certifications and
technological offerings, alongside the existing
diversity and strength of the product set gives us a
strong position in the market to maintain prices and
position ourselves ahead of competitors.
We continue to generate and nurture new, high
quality channel partnerships with established
partners including ServiceNow. We have a dedicated
business development team that is focused on the
implementation and execution of these partnerships
and identifying future partnerships.
We continue to analyse operating expenditure on a
monthly basis and review any significant variances in
the cost base to budget which would allow us to pro-
actively address rising costs.
We continue to invest significantly in our research
and development to ensure that our product remains
best in class. In addition, our solutions are certified,
approved and recommended by 14 governing bodies
and leading organisations globally.
Continuing to innovate and improve R&D processes
with internal expertise, market benchmarking
and consultation and continual tracking of
technological direction.
The acquisition of WipeDrive in June 2022 also brings
with it the opportunities to embed acquired product
features into the Blancco solution in order to continue
to develop our product offering.
We closely manage our key accounts and interact
with our largest stakeholders in order to keep abreast
of market developments and ensure that our product
development roadmap remains market focused and
our solutions address customer requirements
We are ISO9001 certified which provides the
accreditation that we offer products that meet
stringent regulatory requirements.
The risk is increased.
The economic climate is volatile with high pressure on
rising costs.
Mitigations reduce the risk, but this risk is inherent in
the market and cannot be fully removed.
The expanding portfolio of products, services,
offerings, and geographies ensures the risk is relatively
well diversified.
Any partnership entered into has the potential to
underperform, however the Group is encouraged by
the early stages of these high quality partnerships with
global leaders.
The risk is unchanged.
This is an inherently high risk given the markets
that we operate in and importance of technological
developments in our products, and mitigations cannot
fully remove the risk. We continue to mitigate through
detailed strategic planning of our R&D development
that includes our patent processes, control
environment and product roadmaps.
Market and
economic risks
Technological
risk
Principal Risks and Uncertainties continued
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Risk area
Potential impact
Mitigation
Trend
Our internal systems are integral to our service
offerings, our process efficiencies, and our
development abilities. The flexibility and reliability of the
systems is critical to the ongoing growth of the Group.
A potential data breach resulting in loss of data or
compromising the product would create significant
market discontent and could expose the company to
regulatory investigation or fines.
There is a risk that the Group will not be able to meet
the day-to-day running obligations of the business.
We have implemented policies and procedures to
manage our operations efficiently and safely and to
maintain our systems as evidenced by obtaining ISO
9001/27001 accreditation.
We are continuing to highlight the potential risks
internally and raise the profile of internal security.
System enhancement teams work on the continual
improvement and integration of key systems,
including enhanced security, business continuity
and back-up facilities. The integrity of our systems is
maintained through regular backup testing and robust
disaster recovery planning.
We will integrate the internal systems of WipeDrive
following the acquisition, ensuring they are robust and
secure, or where possible migrate them across to our
existing group systems
The group maintains a rolling cash flow forecast to
assess whether we can continue to operate within the
cash reserves and the available pooled overdraft and
revolving credit facility balances.
The group perform sensitivity analysis on forecasts to
account for any downturn in business in comparison
to the budget.
The risk is unchanged.
We continue to monitor the quality of our internal
systems and the robustness of our procedures.
This risk is increased.
The Group’s cash headroom has reduced following
the acquisition of WipeDrive which resulted in the
partial drawdown of the revolving credit facility, and
the share repurchase in H1. However, both at the point
of execution of these transactions and at the date
of approval of the financial statements, the Group
has concluded that it should be able to continue to
comfortably meet its obligations based on forecasts
and sensitivity analysis performed.
Internal
systems and
cyber risk
Financing
risks
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Blancco Technology Group plc | Annual Report and Accounts 2022
Risk area
Potential impact
Mitigation
Trend
Operational efficiency is vital to the profitability of the
Group and to customer service.
The risk arises both at an internal level, where inefficient
operating processes can adversely affect the
profitability of the Group; and at a customer level,
where ineffective products or poor client service
could lead to termination of the relationship.
The Group operates in various jurisdictions globally,
therefore is exposed to varying legislation and
compliance requirements, as well as compliance with
tax regulations and transfer pricing.
The Group continues to focus on standardising
operating procedures across all locations, which
drives consistency in client service.
System enhancement teams work on the continual
improvement and integration of key systems, which
supports further automation and standardisation
of processes.
The Group maintains a collaborative relationship with
customers and tracks customer satisfaction in order
to identify any product or service delivery risks.
The Group monitors global compliance and obtains
local advice and guidance when required.
Blancco continues to be mindful of the implications
the increasing levels of Data Protection legislation in
place globally, and a Data Protection policy is in place
across the Group. This is agreed to by all the Group’s
employees and is also covered within the conduct
of business policy for the Group. Compliance with
Data Protection and GDPR remains a key focus, with
ongoing all-employee training sessions to ensure
compliance with the Group’s Data Privacy Policy and
Information Security Policy.
The Group maintains internal processes to ensure
appropriate guidelines are followed – especially
with regard to data protection and anti-bribery
and corruption.
The Group periodically reviews the terms of its tax
arrangements to ensure these remain compliant
with local law and regulations and that the Group is
compliant with arm’s length pricing principles.
The risk is increased.
Following the acquisition of WipeDrive, there is greater
need to review internal and external processes to
ensure a smooth integration and the retention of key
customer accounts and personnel.
The Group continues to invest in product and its
service teams however acknowledges the changing
market dynamics means this is an iterative process.
The risk is unchanged.
The Group continues to monitor its compliance across
locations and deems the compliance risk to be at a
suitably low level.
Operational
efficiency
risks
Compliance
risks
Principal Risks and Uncertainties continued
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Risk area
Potential impact
Mitigation
Trend
The geographic spread of the Group means that
financial results are affected by movements in foreign
exchange rates, with only a small percentage of the
Group’s revenue being generated in sterling. The risk
presented by currency fluctuations may affect business
forecasting and create volatility in the results and
cash holdings.
The Group monitors foreign exchange exposure
regularly and, when a transactional exposure is not
covered through a natural hedge, consideration will
be given in entering into a hedge arrangement.
The risk is unchanged.
Foreign exchange rate movements are uncertain and
the timing of profits in overseas territories is uncertain,
therefore the Board feels there is no economic and
risk-free way to hedge against this, other than the
natural hedging which is currently undertaken.
Foreign
exchange rate
volatility
Matt Jones
Chief Executive Officer
27 September 2022
Strategic Report
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Blancco Technology Group plc | Annual Report and Accounts 2022
Corporate
Governance
Corporate Governance
Directors and Advisors
.053
Corporate Governance Report
.055
Directors’ Report
.060
Audit Committee Report
.064
Remuneration Committee Report
.068
Statement of directors’ responsibilities
in respect of the financial statements
.073
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Directors and Advisors
Rob Woodward
Board Chair
Board skills and experience
Rob joined the Board in June 2013 and
became Chair in March 2017. He has
significant experience in the technology,
media and telecommunications (TMT)
industry, having spent 11 years as Chief
Executive of STV Group plc. He has also
been Commercial Director of Channel 4
Television, a Managing Director with UBS
Corporate Finance and the lead partner for
Deloitte’s TMT industry Group in Europe.
Rob is also Chair of Ebiquity plc and the UK’s
Met Office.
Chair of Nomination Committee
Matt Jones
Chief Executive Officer
Board skills and experience
Matt joined the board as CEO in March
2018. He has broad experience with
both private equity backed and public
companies. Specialising in the technology
sector, Matt is a recognised leader with
a successful track record of developing
and overseeing the execution of growth
strategies for companies in security, storage
and communications. Matt was previously
CEO of E8 Security, a pioneer in behavioural
intelligence and cybersecurity based in
the USA (acquired by VMWare). Before this
he held CEO and Chair roles at InterAct, a
leading cloud-based software provider for
public safety, CloudShield Technologies,
a provider of cybersecurity (acquired by
SAIC) and Allocity a software company
concentrating on storage management
(acquired by EMC). Matt also has senior
level experience at Excite@Home, Sprint
and AT&T.
Adam Moloney
Chief Financial Officer
Board skills and experience
Adam joined the board as CFO in July 2018.
Adam was CFO of AIM quoted Eckoh plc
(“Eckoh”), a leading provider of customer
service and secure payment technology
solutions for contact centres until 2017.
He had been with Eckoh since 2003 and
was appointed CFO in 2005. During Adam’s
time there, he managed the negotiation and
integration of various significant acquisitions
in the UK and US as well as the opening of
a US subsidiary. Prior to Eckoh, Adam held
senior positions in the finance functions of a
number of privately owned companies.
Frank Blin
Independent Non-Executive Director
Board skills and experience
Frank joined the Board in December 2014.
He holds a number of directorships with
private equity backed companies in the
healthcare, food and drink and property
sectors. He was with PwC for 38 years
where he was a board member, head of its
regional practice and corporate recovery
partner. He was awarded a CBE in 2002 for
services to the financial services sector.
Chair of Audit Committee
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Blancco Technology Group plc | Annual Report and Accounts 2022
Catherine Michel
Independent Non Executive Director
Board skills and experience
Catherine joined the board in January
2020. She is currently Chief Technology
Officer (‘CTO’) for life-saving technology
company Halma plc (‘Halma’), where she
has global responsibility for the group’s
data and technology strategy. She is also a
member of Halma’s Executive Management
Board. Previously, Catherine was CTO for
Sigma Systems following its acquisition
of Tribold Limited in 2013, a business she
founded and, as CTO, was principal architect
of the company’s products and solutions
portfolio. She also serves on the UK5G
Advisory board and was formerly on the TM
Forum Executive Committee. She has won
a number of industry accolades including
‘CTO of the Year’ at Digital Transformation
World, the leading ‘Woman in Telecoms’ at
the World Communications Awards and
twice named one of the ‘Top Most Powerful
People in the Telecoms Industry’ by Global
Telecoms Business.
Tom Skelton
Independent Non Executive Director
Board skills and experience
Tom joined the Board in October 2015.
He recently retired after more than 20
years in Chief Executive Officer roles for
several leading US healthcare technology
firms specialising in workflow automation,
standards-based information sharing, and
data and analytics. Most recently he was
CEO of privately owned Surescripts LLC,
a US based clinical information network
processing over 20 billion transactions
annually. Prior to that, he was CEO for
Foundation Radiology Group and Misys
Healthcare Systems. Tom is currently Chair
of Clearstar LLC and has also served on
the boards of Misys Plc and Micro Focus
International plc.
Chair of Remuneration Committee
Company Secretary and
registered office
Lorraine Young Company
Secretaries Limited
Suite 1, Chapel House
Start Hill
Bishop’s Stortford
Hertfordshire CM22 7WE
Company number
05113820
Independent auditors
PricewaterhouseCoopers LLP
The Maurice Wilkes Building
St. John’s Innovation Park
Cowley Road
Cambridge CB4 0DS
Nominated advisor and joint broker
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Joint broker
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Bankers
HSBC
Vitrum, St John’s Innovation Park
Cowley Road
Cambridge, CB4 0DS
Registrars
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Lawyers
Goodwin Procter (UK) LLP
100 Cheapside
London EC2V 6DY
Financial public relations
Buchanan
107 Cheapside
London EC2V 6DN
Financial advisor
Rothschild & Co
New Court, St Swithin’s Lane
London EC4N 8AL
Directors and Advisors continued
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Corporate Governance Report
Corporate
Governance
Statement
from the
Chair
The Board adopted the Quoted
Companies Alliance Corporate
Governance Code (“the Code”) in
2018. Information about how the
Company has applied the Code
principles follows this statement.
The Board considers that the Company complies with the Code.
In my role as Chair, I lead the Board’s deliberations on governance
matters and work with the rest of the Board and the company
secretary to promote good governance across the Group. I am
also responsible for the effective running of the Board, including
ensuring that the Board has open debate on appropriate matters,
in which all directors are encouraged to participate. This year,
as the pandemic restrictions were gradually lifted, we were able
to meet more often in person, which is particularly helpful for in
depth discussions. We also held some hybrid and fully virtual
meetings, being mindful of the need to control the environmental
impact of our air travel.
Where we agree to make changes to our governance
arrangements, I take responsibility to make sure the agreed
actions are completed. More information about my role is given
under principle 9 on page 59.
Over the past year the board has considered a number of matters
relating to the Group’s governance. The Company’s initiatives on
ESG matters have progressed well and environmental and social
issues are a regular feature on the board’s agenda. Our third ESG
report is due to be published this year. We also conducted a
board effectiveness review at the start of 2022. No major areas of
concern were raised. More details of the process and outputs are
given under Principle 7 on page 58.
Our engagement with existing and potential institutional
shareholders has continued, with the executive directors
attending a number of in person and virtual events. The board
receives feedback from these. The Company now has five
analysts providing coverage of it. More details of our engagement
with institutional shareholders are noted under Principle 2 on
page 56.
For retail investors we have continued to use the “Investor Meet
Company” platform when we publish our full and half year results
and the presentations which the CEO and CFO give then are well
supported. There is good interaction with those attending and the
opportunity for them to ask questions also. Our 2021 AGM was
held in hybrid format, which allowed investors to attend in person
or virtually as they preferred.
We continue to engage with our other stakeholders to hear their
views and obtain feedback. Some engagement is carried out
by the board, but where this is not the case the board receives
reports on the outcome and takes account of this when making
decisions. Our Section 172 report can be found on pages 61 and
62 of the Annual Report.
In conclusion, all of the directors take seriously their obligations
to act in good faith to promote the success of the Company
for the longer term and we strive to provide the right support
and challenge for the executive team to deliver outstanding
performance at an exciting stage in the Company’s growth and
development. This is done while maintaining appropriate checks
and balances to ensure risk is properly managed and that there is
no compromise in adhering to our corporate culture and values.
Rob Woodward
Chair
27 September 2022
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Corporate Governance Report continued
The following statement describes how Blancco has applied the ten principles in the Code during the past year. The full version of this statement can
be found under the investor section of the Company’s website. The Code recommends that certain disclosures appear in the Annual Report and others
appear on the website. Where more information is provided on the website, this is indicated in the statement below.
Deliver growth
Principle 1: Deliver a strategy and business model
which promote long-term value for shareholders
The Company’s strategy and business model, the challenges
faced by the business in executing them and how those
challenges are being addressed, are described in the Annual
Report. The board had two dedicated sessions during the year
to discuss different aspects of progress on strategy, which we
were able to hold in person – which is more effective for such
deliberations. The board is continuing to pursue the current
strategy while considering longer-term opportunities for business
growth, with a focus on how Blancco can help its end customers
to do business in a more sustainable and environmentally
friendly way.
The board receives regular updates from members of the senior
management team about progress in delivering the strategy and
will, from time to time, invite individuals to present to the board
so that directors can understand and discuss various aspects of
the business model, providing support and challenge from their
skills and experience. This year the board heard about progress
in delivering greater volumes of erasure for ITADs, cybersecurity
initiatives and training (in which the board participated) and more
initiatives for recycling laptops for disadvantaged children and
young people which also reduces e-waste.
Principle 2: Seek to understand and meet shareholder
needs and expectations
The Company seeks to engage with shareholders in a number
of ways. These are described in the full version of the corporate
governance statement, which is on the Company’s website.
Principle 3: Take into account wider stakeholder and
social responsibilities and their implications for long-
term success
As the executive team reviews the Group’s strategy from time to
time, they consider the key resources and relationships which
are essential to the ongoing success and growth of the business
in light of the evolution of the technology, products and services
offered, the markets in which the business operates and the
competitor landscape, among other things. Their conclusions
are shared with the Board. Further information on the Company’s
stakeholders and how the Board takes their views into account is
given on the Company’s website.
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Blancco Technology Group plc | Annual Report and Accounts 2022
Maintain a dynamic management framework
Principle 4: Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
During the year, the executive team has continued to assess the
opportunities and risks facing the Group. Following the work done
with Protiviti, they produced an updated risk analysis and matrix,
which lists the key risks faced by the Group, their likelihood and
impact and what is being done to mitigate them.
The board considers this high level analysis as an agenda item
at least twice each year and on other occasions if something
significant has changed which requires reconsideration of
the risks the business faces. The executive team also reviews
the risk analysis quarterly. The audit committee reviews the
risk management and internal control framework at least
annually and reports to the board on its effectiveness, with any
recommendations for improvements.
A list of the key risks facing the group, with the actions taken
to mitigate them can be found in the Strategic Report in the
Annual Report.
Principle 5: Maintain the board as a well-functioning,
balanced team led by the Chair
The board considers that each of the non-executive directors is
independent. The executive directors are both employed by the
Company on a full time basis. All of the non-executive directors
demonstrate the commitment to their roles which is expected of
them and give sufficient time to carry out their duties properly.
Rob Woodward, the board Chair was appointed to the board on 1
June 2013 and has therefore completed nine years of service on
the board. He became Chair in March 2017. The Code notes that
independence is a board judgement and the board has concluded
that Rob continues to be independent.
Information on the roles and duties of the Chair, CEO, non-
executive directors and the company secretary is given under
principle 9. The time commitment for the Chair is approximately
one day per week. The time commitment for the other non-
executive directors is approximately 30 days per year.
The table below shows the number of board and committee
meetings held during the financial year to 30 June 2022 and the
attendance record of each director.
Board
Audit Committee
Remuneration Committee
Nominations Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Rob Woodward
9
9
4
4
3
3
5
5
Matt Jones
9
9
–
4*
–
2*
–
5*
Adam Moloney
9
9
–
4*
–
2*
–
5*
Frank Blin
9
8
4
4
3
3
5
4
Catherine Michel
9
9
4
4
3
3
5
5
Philip Rogerson**
4
4
1
1
1
1
1
1
Tom Skelton
9
9
4
4
3
3
5
5
* Attended by invitation
** Resigned on 13 December 2021
If directors are unable to attend board or committee meetings,
they review the relevant papers and give their views to the board
or committee Chair and are provided with an update after
the meeting.
Principle 6: Ensure that between them the directors
have the necessary up-to-date experience, skills and
capabilities
The names of the directors who served during the year are given
in the directors’ report on page 60 in the Annual Report. Brief
biographical details of each director are set out on pages 53
and 54 of the Annual Report and on our website. The directors
come from diverse professional backgrounds and have a wide
range of experience. Three of them have served as CEOs in public
companies and all have experience of running businesses and/or
advising business owners and leaders, some of which was carried
out with international organisations. In their other roles, they have
contributed to the development of strategy and handled M&A and
other corporate finance transactions. Four of the directors have
relevant experience in the technology (including cybersecurity)
and related sectors. Two are accountants and several have served
on listed company boards (including as Chair) for many years,
bringing a good breadth of corporate governance knowledge.
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Maintain a dynamic management framework continued
Corporate Governance Report continued
Principle 6: continued
Rob Woodward, the board Chair, is due to be re-elected
by shareholders at this year’s AGM and the nominations
committee (without Rob being present) has recommended
his reappointment. Rob brings a wealth of relevant sector and
business expertise, leadership strengths as well as City and
corporate finance knowledge to the board and the role of Chair.
Each year the board receives an update on the AIM rules from the
Company’s nomad. As part of the strategy review sessions and
at other times during the year, the board is given presentations
by members of the leadership team on various aspects of the
business. The company secretary provides a regular update to
the board on relevant legal, regulatory and governance matters.
The external auditor provides information about changes to
accounting standards and developments in financial reporting.
The remuneration committee has appointed Deloitte to advise
it on market practice and investor relations in respect of
remuneration matters.
Details of the company’s other retained professional advisers
are given on page 54 of the Annual Report and on our website.
The company secretary provides advice to the board and
committees as well as to individual directors as required. She
supports the Chair on matters of corporate governance and
the running of the board and nominations committee. A full role
description for the company secretary can be found on the
Company’s website.
Principle 7: Evaluate board performance based on
clear and relevant objectives, seeking continuous
improvement
The board carries out a regular (usually annual) effectiveness
review using questionnaires. The review includes an evaluation
of the board’s own effectiveness and that of its committees and
individual directors. The questions are updated each year. As part
of the review the Chair meets with each of the directors to discuss
performance, board composition and succession planning.
All of these interactions were conducted virtually for the most
recent review which was held at the start of 2022. More details
of the review are given on the Company’s website. The overall
conclusion was that the board, committees and directors were
performing well and there were no major concerns. The board
also noted changes in responses compared to the review held in
the previous year.
Principle 8: Promote a corporate culture that is based
on ethical values and behaviours
The executive team launched the Company’s vision, mission and
values during 2019. Various initiatives have since taken place to
roll out and embed these across the Group. More information
relating to this principle is on the Company’s website.
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Blancco Technology Group plc | Annual Report and Accounts 2022
Principle 9: Maintain governance structures and
processes that are fit for purpose and support good
decision-making by the board
The board is made up of six directors, two of whom are executive
and four of whom are non-executive. All of the non-executive
directors are independent. The board has an audit committee,
chaired by Dr Frank Blin, a remuneration committee chaired
by Tom Skelton and a nominations committee chaired by Rob
Woodward. All of the non-executive directors are members of
these committees. The executive directors and others may be
invited to attend the committee meetings from time to time.
The Chair is responsible for the leadership of the board and
ensuring its effectiveness. He is also responsible for creating the
right board dynamic and for promoting a culture of openness
and debate, in addition to ensuring constructive and productive
relations between executive and non-executive directors. The
Chair acts as an ambassador for the Company to its stakeholders,
and in particular, works to ensure there is sufficient and effective
communication with shareholders and to understand their issues
and concerns.
The CEO, with the senior management team, is responsible for
running the business, developing group strategy having regard
to the Group’s responsibilities to its shareholders, customers,
business (channel) partners, employees and other stakeholders.
He is also responsible for delivery of the successful achievement
of objectives and execution of strategy following presentation
to, and approval by, the board, optimising the use of the
Group’s resources.
The non-executive directors are responsible for exercising
independent and objective judgement when making board
decisions, developing corporate strategy with senior
management, and for scrutinising and constructively
challenging the actions of senior management.
The company secretary is responsible for advising the board
on corporate governance matters, supporting the board and
committee chairs in the running of the board and committees
and liaising with shareholders on governance matters, among
other things.
Further information, including links to role descriptions for the
Board, the list of matters reserved to the Board and the terms
of reference for the Board Committees can be found on the
Company’s website. The Board considers that the current
governance framework is fit for purpose for the Company at
its present stage of development and there are no current
plans to change it.
Principle 10: Communicate how the company is
governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders
The work of the audit and remuneration committees during the
year is given in their respective reports in the Annual Report. The
report of the audit committee is on pages 64 to 67 and the report
of the remuneration committee is on pages 68 to 72.
The board skills audit was refreshed in 2022 as part of the board
effectiveness review. This showed that the directors continue to
have between them, a wide range of relevant skills and experience
which is sufficient for the needs of the Company at the current
time. The balance of knowledge, skills and experience on the
board will be kept under review as the business grows.
Information about the disclosure of AGM voting and publication of
the Annual Report can be found on the Company’s website.
Build trust
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Directors’ Report
The Directors present their
report together with the audited
consolidated financial statements
for the year ended 30 June 2022.
Strategic Report
In accordance with sections 414A-D of the Companies Act 2006
a Strategic Report is set out on pages 1 to 51 which incorporates
the Chair’s Statement, the Chief Executive’s Report, the Chief
Financial Officer’s Report and Business Model. The Strategic
Report includes details of expected future developments in the
business of the Group, principal risks and uncertainties and the
key performance indicators used by management.
The Group is not required to comply with Schedule 8 of the
Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations as amended in 2013 which enhanced
reporting requirements for the Directors’ Remuneration Report.
However, the Remuneration Report on pages 68 to 72 does set
out the remuneration policy and shareholders are invited to vote
on this report at the Annual General Meeting (AGM).
The Strategic Report has been prepared to provide the
Company’s shareholders with a fair review of the Company’s
business and a description of the principal risks and uncertainties
facing it. It should not be relied upon by anyone, including the
Company’s shareholders, for any other purpose.
Results and dividends
The audited financial statements for the Group for the year ended
30 June 2022 are set out from page 80. The Group profit for
the year after taxation was £2.1 million (2021: £1.7 million). The
future plans for the business are such that the Board anticipates
continued investment into the business that will require cash
resources to be deployed into opportunities for future growth.
Therefore, the Board has decided that it is not appropriate to pay
a dividend for the time being.
Directors
The Directors of the Company who served during the year and up
to the date of signing of the report and accounts were as follows:
F Blin
M C Jones
C E Michel
A P Moloney
T K Skelton
R S L Woodward
P G Rogerson resigned from the Board on 13 December 2021.
Biographical details of the Directors are on pages 53 to 54 and
the interests of the Directors in the shares of the Company are
set out on pages 71 to 72.
Directors’ liability insurance and indemnities
The Company maintains liability insurance for the Directors and
Officers of all Group companies and has entered into deeds of
indemnity with each Director of Blancco Technology Group plc
as permitted by the Companies Act 2006 and the Company’s
articles of association. These indemnities are qualifying third-
party indemnity provisions as defined by the Companies Act
2006. These indemnities were introduced in May 2021 and have
continued in place since then.
Related party transactions
The details of transactions with Directors and other related parties
are set out in note 30 to the financial statements.
Share capital
The issued share capital of the Company at 1 July 2021 was
£1,511,605.92 comprised of 75,580,296 ordinary shares of two
pence each (“ordinary shares”). On 15 December 2021, 92,619
shares were allotted at par in respect of the vesting of awards
under the Company’s performance share plan.
The issued share capital of the Company at 30 June 2022
was therefore £1,513,458.30, comprised of 75,672,915
ordinary shares.
Substantial shareholdings
As at 27 September 2022, the following shareholders owned
more than 3% of the issued share capital of the Company:
% of issued share capital
Number of shares
Soros Fund Management
21.86
16,542,669
Canaccord Genuity Group Inc
13.46
10,188,529
Inclusive Capital Partners LP
11.91
9,014,835
Schroder Investment Management
6.21
4,699,940
Chelverton Asset Management
4.16
3,145,790
Kabouter Management LLC
3.68
2,787,223
BGF
3.31
2,503,402
Janus Henderson Investors
3.30
2,494,549
Forager Funds Management Pty Ltd
3.23
2,445,250
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Blancco Technology Group plc | Annual Report and Accounts 2022
Section 172 Report
In accordance with Section 172 of the Companies Act 2006,
the Board of Directors ensures that the Company engages
productively and openly with its stakeholders. The Board considers
matters raised by stakeholders in a fair and balanced manner
and takes their views into account when making decisions. The
following table describes why and how we engage with each of our
stakeholder groups: investors, employees, customers, partners,
industry bodies, communities and regulators. Additional information
about the ways in which the Board engages with stakeholders and
the consideration given for likely consequences of any decision in
the long term can be found in our Corporate Governance Report
on pages 55 to 59. For more detailed information about our ESG
management, please see our 2022 ESG Report, or a summary of
the report on pages 30 to 43.
Stakeholder group
Why we engage
How we engage
Investors
Our shareholders have a key role in monitoring the
performance of and supporting the success of the business.
We ensure regular and open dialogue with our major
shareholders in order to keep them informed of our strategic
progress and plans.
The CEO and CFO regularly engage with our major investors, particularly at the time of the
announcement of our full and half year results when investor roadshows are arranged. The
Chair of the Board, Chair of the Remuneration Committee and Company Secretary engage
with investors on matters of corporate governance and the AGM provides another forum
where investors can interact with the Board.
Feedback from all of these interactions is shared with the Board. The CFO also attends
investor conferences from time to time. We issue updates on material matters via the
Regulatory News Service and other materials are available on our website.
Employees
In order to promote high performance and ensure
retention, we want to maintain a proactive culture, affording
opportunities to develop and progress. We engage with our
employees to enable them to feedback on their experience
and ensure that they are supported.
We have cultivated an open and honest environment in which the Senior Leadership Team
members are easily approachable. We conduct HR Country Calls every four to six weeks
and hold All Hands Calls which include the global workforce.
The Annual Global Employee survey provides an opportunity for formal feedback from
employees. Our Global Employee Forum meanwhile comprises employees from across
the business to represent their colleagues at meetings hosted by the CEO and SVP
Human Resources, which provide an opportunity to engage directly with the Executive
Team on key issues.
The feedback from the employee survey and actions taken as a result are shared with
the Board, and the SVP Human Resources provides reports to the Board on all employee
matters, including details of the activities of the Global Employee Forum.
To ensure we maintain the highest standards of business conduct, training on our
policies is mandatory for all new joiners and we conduct refresher training for employees
every two years for our Code of Business Conduct, Anti-corruption and Bribery Policy,
Whistleblowing Policy, Modern Slavery Policy, and Data Protection Policy. To ensure
effective governance of ethics issues, there are multiple layers of oversight, including
the Board.
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Blancco Technology Group plc | Annual Report and Accounts 2022
Directors’ Report continued
Stakeholder group
Why we engage
How we engage
Customers
We are committed to delivering the highest possible standard
of customer experience and want to ensure we retain our
loyal customers as well as attract new business. We engage
with our customers regularly and respond to their feedback in
order to understand and meet their evolving needs.
We engage with customers through a number of channels, including our Net Promoter
Score (NPS) survey, Win Loss survey, the Customer Advisory Board, and direct
interactions between our Sales Team and customers. Feedback from these is shared
with the Board. From time to time customers attend meetings with the Board, enabling an
exchange of views.
Partners
Engaging with our strategic partners enables us to improve
our services and focus on research and development to meet
the needs of our customers whilst ensuring we obtain the
best possible value from our investments.
In addition to the regular feedback we receive, a Customer Advisory Board facilitates
engagement with key customers. This forum provides an in-depth understanding of our
partners’ requirements and stimulates collaborations that can lead to the development of
new solutions and the implementation of improved efficiencies in our existing products.
Industry bodies
We want to continue to drive progress in our sector and
take part in the exchange of knowledge, expertise, and best
practice through engagement with industry bodies.
We support and are members of a range of sector-relevant bodies around the globe and
encourage active participation of our employees in these associations, with employees
attending conferences, meetings, and roundtables.
Communities
We want to be able to give back to the communities we
operate in, not only through charitable giving, but in the
deployment of our resources to support specific needs.
We also consider the potential environmental impacts of
our activities and strive to reduce these through
appropriate measures.
We support several charities around the globe to facilitate access to technology for
underprivileged groups. This year we launched our new Volunteer Day programme, which
enables employees to take a paid day off every year to do voluntary work of their choice.
This year the Group has taken further steps to understand its carbon profile and has offset
its entire emissions footprint for the 2021 calendar year, enabling Blancco to achieve
carbon neutrality for that period.
Regulators
We maintain open and transparent dialogue with regulators,
which fosters positive and productive relationships as well as
effective oversight of our operations for customers.
Our solutions have been tested, certified, approved, and recommended by 13+ governing
bodies and leading organisations around the world.
Section 172 Report continued
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Blancco Technology Group plc | Annual Report and Accounts 2022
Research and Development
The Group has a significant focus on continued research and
development, to ensure that the Group’s key products continue
to evolve and remain industry leading. This covers both new
inventions, which are encouraged via staff incentives for
proposing new ideas and ensuring that the product set keeps
pace with technological development generally in the market.
We continue to invest in patenting our technology to ensure that
new advances are sufficiently well protected from competition
and also obtain certifications in the geographies in which we
operate to ensure our product developments are supported by
endorsements from governing bodies.
The Group continues to invest a significant amount in research
and development, with expensed research and development
costs totalling £1.2 million (2021: £1.1 million) and capitalised
development costs totalling £4.1 million (2021: £4.2 million).
Streamlined Energy and Carbon Reporting
During the year, we have continued to assess the environmental
impact of our business and engaged a consultancy to conduct a
carbon audit of the business. Our energy consumption metrics are
disclosed in the ESG Report on pages 30 to 43. Blancco achieved
carbon neutrality in June 2022 in respect of the 2021 calendar year.
Going concern
The Group meets its day-to-day working capital requirements
through its cash reserves and a revolving credit facility, which
expires in January 2024.
Further information on the Group’s business activities,
together with the factors likely to affect its future development,
performance and position is set out in the Strategic Report
from page 1. Further information on the financial position of the
Group, its cash flow, liquidity position and borrowing facility is
also described in the Strategic Report. In addition, note 26 to the
financial statements includes the Group’s objectives, policies
and processes for managing its capital, and its exposures to
credit risk and liquidity risk.
After making enquiries, the Board has a reasonable expectation
that the Company and the Group have adequate resources
to continue in operational existence for a period of at least 12
months from the date of these financial statements. Accordingly,
they continue to adopt the going concern basis in preparing the
Annual Report and Accounts.
Financial risks
Information on the Group’s financial risk management objectives
and policies and its exposure to credit risk, liquidity risk, interest
rate risk and foreign currency risk can be found in note 26 to the
financial statements.
Post year end events
There have been no events requiring disclosure since the
year end.
Independent Auditors
A resolution to reappoint PricewaterhouseCoopers LLP as
auditors will be proposed at the AGM.
Disclosure of information to the auditors
As required by Section 418 of the Companies Act 2006, each
Director serving at the date of approval of the financial statements
confirms that:
•
to the best of their knowledge and belief, there is no
information relevant to the preparation of their report of which
the Company’s auditors are unaware; and
•
each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Company’s auditors
are aware of that information.
Words and phrases used in this confirmation should be interpreted
in accordance with Section 418 of the Companies Act 2006.
By order of the Board:
Lorraine Young Company Secretaries Limited
Company Secretary
27 September 2022
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Blancco Technology Group plc | Annual Report and Accounts 2022
Audit Committee Report
During the 2022 annual cycle, the
Audit Committee met four times.
It has an annual work plan,
developed from its terms of
reference, with standing items that
the Committee considers at each
meeting in addition to any specific
matters which the Committee
chooses to focus on.
Key areas of focus during the year
The Audit Committee primarily focuses on challenging the
judgements and estimates and agreeing the accounting
proposed by the executive management team in judgemental
areas and to ensure sufficient controls are in place to mitigate
against potential misstatement in the financial statements. This
includes assessing Group-wide internal controls.
Additionally, the Committee reviews the Group’s Risk
Management framework at each meeting.
The Chief Financial Officer presents the risks as documented
by the Group’s Risk and Opportunities Committee, which are
presented against an assessment of likelihood and severity, and
the associated mitigations of those risks. The key risks faced by
the Group are presented in the Strategic Report.
The Committee also reviews the Group’s Code of Conduct and
any instances of whistleblowing in the year. There have been
no incidents of whistleblowing events in the current or previous
financial years.
The Committee reviews the work of the external auditor. This
includes approving the audit scope and approach, the fees for
both audit and non-audit services and reviewing the outcome of
audit work. Any non-audit work provided by the incumbent auditor,
for which the fee would be above £20,000, must be approved by
the Board.
Auditor’s Independence
The Group’s auditor is PricewaterhouseCoopers LLP (PwC).
PwC was first appointed auditor at the 2017 Annual General
Meeting and has been reappointed at each subsequent AGM.
Assignments of non-audit work have been, and continue to
be, subject to controls by management that have been agreed
by the Audit Committee, so that auditor independence is not
compromised. The Group has not instructed any non-audit work
by PwC during the current or previous financial years.
The Audit Committee and the Board place great emphasis on the
objectivity of the external auditor in its reporting to shareholders.
The audit partner and senior manager attend Audit Committee
meetings as required to ensure full communication of matters
relating to the audit. The overall performance of the auditor is
reviewed annually by the Audit Committee, taking into account the
views of management, and feedback is provided when necessary
to senior members of the audit firm unrelated to the audit. The
Audit Committee also has discussions with the auditor on the
adequacy of controls and on any judgemental areas. These
discussions have proved satisfactory.
The Senior Statutory Auditor is due to rotate off the audit this year
following five subsequent years of service. The incoming Senior
Statutory Auditor has had meetings with the Committee and
management team and been involved in shadowing the key audit
matters and judgements for the current financial year, as well as
being present at the final Audit Committee meeting which took
place in advance of the approval of the financial statements.
Frank Blin
Chair of Audit Committee
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Blancco Technology Group plc | Annual Report and Accounts 2022
Accounting and financial reporting matters
considered by the Audit Committee
After discussion with both management and the external
auditor, the Audit Committee determined that the key risks of
potential misstatement in the Group’s financial statements
related to revenue recognition, management override of controls,
capitalisation of development costs, the acquisition of WipeDrive
Inc, and, for the parent company, investments in and amounts due
from subsidiaries.
The acquisition of WipeDrive Inc, and the resulting acquisition
accounting, has been considered a significant risk due to the size
of the acquisition and the judgements involved in assessing the
fair values of the assets and liabilities acquired, including valuation
of acquired intangibles. The Committee reviewed management’s
assessments and assumptions in arriving at the value of the
assets and liabilities acquired, with reference both to due diligence
work undertaken in advance of the acquisition and also against
the Group’s experience of acquisitions undertaken in previous
financial years.
These issues were discussed with management during the year
and with the external auditor at the time the Committee reviewed
and agreed the external auditor’s audit plan, and this included the
WipeDrive transaction at the time of the conclusion of the audit of
the annual financial statements in September 2022.
Internal Audit
On a periodic basis, the Committee discusses the requirement
for the Group to have an internal audit function. The Committee
believes that the existing control framework, reporting from
management, and work performed by the external auditor is
sufficient for the size and complexity of the business, and there
are therefore no current plans to appoint an internal auditor.
Revenue recognition
The Group enters into contracts where revenue recognition can
be complex. There is potential risk of misstatement of revenues
associated with software licence contracts where:
•
The contract delivers multiple separable elements.
•
Timing/proof of delivery of licences and associated services
can vary across contracts.
•
Delivery of contracts takes place through several channels,
direct to customers, via a third party, and through virtual
delivery via the cloud.
Judgement is required in establishing the transfer of control
under IFRS 15. This is particularly pertinent for multiple element
contracts where certain deliverables could be intrinsically tied to
others, and therefore considered a single performance obligation,
and where this judgement could vary on a contract by contract
basis. There are further judgements made in relation to the point
at which delivery has occurred where licences are held on a cloud
account managed by Blancco, and in relation to the allocation of
the transaction price to separable performance obligations of a
revenue contract.
Judgement is required to determine whether the conditions for
recognising revenue for any particular contract under the Group’s
accounting policies have been met.
The accounting policies of the Group are outlined in note 1.10 to
the financial statements.
In exercising this judgement and with respect to revenue
recognition on large contracts, management highlighted to the
Committee how it arrived at the key assumptions. This included:
•
The point of revenue recognition under contracts.
•
A summary of the Group’s standard contract terms and
contracts where revenue recognition departs from
the standard.
•
Comparison of the payment profile with the revenue profile
of key contracts.
•
Analyses of separable elements of the revenue streams where
multiple service components are delivered to the customers.
•
The controls in place to ensure contracts are appropriately
recorded in the financial statements.
Management also highlighted the controls in place around
inception of a sales contract, completeness of invoicing,
processing of revenue recognition and debt management.
The Committee’s deliberations involved considering and
understanding the outcome of management’s review of material
contracts on an individual basis, to ensure there was sufficient
evidence for both meeting the revenue recognition criteria
under IFRS 15 and gaining sufficient comfort that the monies
for revenues booked would be collected on a timely basis.
It also involved assessment of the findings of the external auditor
across individual contracts tested.
The Committee was satisfied that there was a reasonable
basis for the revenue recognition assessments, there was an
expectation that the revenue recognised would be collected in
full and that the accounting treatment adopted was reasonable.
The Committee concluded that:
•
In respect of management’s judgements in applying the
requirements of IFRS 15, these judgements were reasonable.
•
In respect of the software and services multi-element
arrangements, the assessments on point of revenue
recognition were based on contract terms and the treatment
adopted by management was reasonable.
•
In respect of nature and timing of delivery of software, the
point of transfer of control was reasonably recorded.
•
The controls in place for approvals for material and non-
standard contracts were appropriate.
•
The controls in place for review of contracts and ensuring
checking of revenue recognition were appropriate.
•
In respect of the cash collected, there was a strong correlation
between revenues recognised and cash collected at and
subsequent to the year end.
The Committee was satisfied with the disclosures in the
financial statements.
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Blancco Technology Group plc | Annual Report and Accounts 2022
Management override of controls
The Board recognises that the risk of override of controls cannot
be fully eliminated in any business and that the Group has clearly
defined policies and controls in place. The Board is in constant
communication with management and requests updates on the
state of the control environment, to be comfortable that risks
are mitigated as far as practicable, with a particular focus on
revenue recognition.
The Board has further reviewed the controls over access to cash
and cash management to ensure that the risk of misappropriation
of cash is at a sufficiently low level.
The Committee concluded that:
•
The Board has performed appropriate procedures to
minimise the risk of any possible management override of
controls as they relate to the financial statements;
•
The scope of work of the auditor has been sufficient to
identify weaknesses in the control environment, and that the
prevalence of weakness is at a reasonable level;
•
The Group’s control environment, including the controls
over revenue management, provides an appropriate level of
coverage and review over revenue contracts;
•
Management’s oversight of its operating locations
covering accounting, banking and operational matters is
reasonable; and
•
The Group’s systems are appropriate for the business.
Capitalisation of development costs
The Group undertakes development of its products. A large
proportion of this cost capitalisation is for internal staff costs
working on these projects.
The accounting policies of the Group are outlined in note 1.6 to
the financial statements.
There is a potential risk of misstatement because of:
•
Inappropriate judgements on whether a project or asset meets
the criteria for capitalisation;
•
Inappropriate allocation of staff time against research
and administration related tasks, which do not qualify for
capitalisation, and development work;
•
Impairment of capitalised assets which depends on future
cash flows; and
•
Development of new technology, or change in strategic focus,
may render previously capitalised assets obsolete.
In addition, uncertainty arises specifically in the assessment of
future cash flows which are inherently difficult to predict.
Management highlighted to the Committee how they arrived at
the key assumptions. This included:
•
A summary of the processes used in determining what costs
to capitalise, including assessment of projects completed and
products released in the year.
•
Consideration of the future economic benefit of current
development work and acquired IP, including scrutiny of
planning and assessment of contracted future revenues and
the pipeline of new business.
•
Review of estimates of future cash flows.
•
Review of the assumed useful economic life used.
•
Review of past development projects which have generated
economic benefit for the Group.
The Committee challenged management’s key assumptions to
understand their impact. The Committee was satisfied that the
assumptions used were appropriately scrutinised, challenged and
sufficiently robust.
The Committee concluded that:
•
In respect of the capitalisation of costs, the amounts allocated
to the development phase of the intangible assets were
appropriately capitalised and supported by project data.
•
In respect of potential impairment, future cash flows
sufficiently supported the asset value.
•
In respect of the potential impairment of development
intangibles, the value of future cash flows was expected to be
in excess of the carrying value of the intangible.
Acquisition of WipeDrive Inc
In June 2022, the Group acquired WipeDrive Inc. The accounting
for the acquisition required a significant degree of judgement
around the value of the acquired intangible assets on acquisition
and the extent to which contingent or undisclosed liabilities exist.
There is also $1.5 million of contingent consideration payable
in June 2023, where there is estimation uncertainty around
whether the criteria for the consideration to be paid out in full will
be met. The valuation of intangibles is particularly pertinent as it
represents a material portion of the purchase price allocation.
The accounting policies of the Group are outlined in note 1.6 to
the financial statements. The estimation uncertainty involved in
measuring the acquired assets and liabilities is outlined in note 2.2
to the financial statements.
The risk of misstatement arises from:
•
Intangible assets incorrectly valued, based on future forecasts
of profitability, quality of customer relationships and brand
value which are inherently judgemental.
•
Valuation of liabilities acquired in the business which may
be undisclosed or unknown at the point of acquisition, or
those liabilities which have been identified but may require
judgement around the size or extent to which they
might crystallise.
The Committee reviewed management’s assumptions used in
modelling for the future present value calculation of intangible
assets. The Committee also reviewed the supporting analysis for
the extent to which potential liabilities may occur, with reference
to third party due diligence reports commissioned during the
acquisition process. It also considered the extent to which
liabilities have crystallised (1) in the post-acquisition period and
(2) in the years following the Group’s prior acquisitions, and to the
extent these liabilities may have been over or under provided for.
Audit Committee Report continued
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Blancco Technology Group plc | Annual Report and Accounts 2022
The Committee concluded that:
•
In respect of intangible assets, the measurement basis was
appropriate and judgements used were reasonable.
•
In respect of the value attributed to the acquired IP, this has
been calculated on the basis of reasonable assumptions.
•
In respect of the book assets and liabilities acquired, these
were reasonably measured and disclosed.
•
In respect of the fair value assets and liabilities acquired, there
was reasonably basis for the recognition of these, and the
assumptions applied in measuring these were appropriate.
•
In respect of the disclosures concerning estimation
uncertainty, these were considered sufficient.
Recoverability of amounts due from subsidiaries
(Company only)
For the parent company, the recoverability of amounts due
from subsidiaries is considered to be a potential risk should the
future profitability of the Group be insufficient to substantiate the
carrying value of assets.
Uncertainty arises due to the difficulties in forecasting and
discounting future cash flows that support cash generation in
the future, especially if the amounts outstanding are less than the
market capitalisation of the Group, which is used as a benchmark
to identify a potential impairment trigger.
Furthermore, estimation uncertainty exists in assessing the
appropriate level of loss provision on amounts due from
subsidiaries for the parent company, considering the lack of
historical evidence available within the Group.
The relevant accounting policies of the Company are outlined in
note 3.2 to the Company’s financial statements.
Management highlighted to the Committee how it arrived at the
key assumptions to estimate the future cash flows.
This included:
•
A robust budget process including the input of functional
managers across the business for the financial year ending
June 2023.
•
Other underlying assumptions, by benchmarking these against
prior performance and also market and sector trends.
•
The resilience of the Group operating within an economic
environment impacted by COVID-19, and how the Group
expects to continue to generate profit and growth in
its forecasts.
•
Quality and integrity of the Group’s forecast P&L and cash
flow models.
•
Sensitivity analysis performed.
•
Annual testing procedure together with review of year to
date actuals.
•
Assessment of the discount rates used.
•
Comparison of the carrying value of assets versus the market
valuation of the Group.
The Committee evaluated management’s assumptions through
the planning process and in its assessment of the net present
value of future cash flows into the medium term, and was satisfied
that the value in use as represented by the net present value of
future cash flows was sufficient to justify the carrying value of
amounts due from subsidiaries. The Committee was satisfied
that the work performed sufficiently addressed the ongoing
risks associated with the COVID-19 pandemic and other socio-
economic pressures.
The Committee reviewed the basis of calculation of loss provision
for amounts due from subsidiaries for the Company as required
under IFRS 9 and concluded this was appropriate.
The Committee concluded it was satisfied with the disclosures in
the financial statements and:
•
The projected future cash generation of the business
was sufficient to justify the carrying value of amounts
due from subsidiaries;
•
The market capitalisation of the Group exceeded the
carrying amounts; and
•
The loss allowance applied was appropriate based on
management’s benchmarking, and impairment testing
and sensitivity analysis thereon indicated evidence of
recoverability was otherwise sufficient.
Conclusion in respect of the Annual Report and
Financial Statements
The production and the audit of the Company’s Annual Report
and Accounts is a comprehensive process requiring input from a
number of different contributors. One of the key requirements of
the Company’s Annual Report and Accounts is that they are fair,
balanced and understandable. The Board has requested that the
Audit Committee advises on whether it considers that the Annual
Report and Accounts fulfil these requirements.
As a result of the work performed, the Committee has concluded
that the Annual Report and Accounts for the year ended 30 June
2022, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy
and has reported on these findings to the Board. The Board’s
conclusions in this respect are set out in the Statement of
Directors’ Responsibilities on page 73.
Frank Blin
Chair of the Audit Committee
27 September 2022
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Blancco Technology Group plc | Annual Report and Accounts 2022
Remuneration Committee Report
The Remuneration Committee
determines on behalf of the
Board the Company’s policy on
the remuneration and terms of
engagement of the Executive
Directors and senior executives.
The members of the Remuneration Committee are disclosed in
the Corporate Governance Report on page 59.
The Remuneration Committee is supported by Sarah Smith,
the Company’s Senior VP of Human Resources and by its
advisors Deloitte LLP. Deloitte LLP is a founding member of the
Remuneration Consultants Group. Deloitte LLP do not provide
any other services to the Group. Executive Directors also
attend Remuneration Committee meetings by invitation
when appropriate but are not present at any discussion of
their own remuneration.
Remuneration policy for all employees
The Group operates in a highly competitive global environment
for talent in the technology sector. For the Group to compete
successfully in these challenging conditions, it is essential that
the level of remuneration and benefits offered is reflective of the
market in each location in order to attract, retain and motivate
individuals of a high calibre at all levels across the Group, while
ensuring that arrangements are aligned with business strategy
and shareholders’ interests.
The Group therefore sets out to provide competitive remuneration
to all its employees, appropriate to the business environment in
the markets in which it operates. To achieve this, each individual’s
remuneration package is based upon the following principles:
•
Total rewards are set to provide a fair and attractive
remuneration package without paying more than is necessary;
and
•
Appropriate elements of the remuneration package are
designed to create alignment with business strategy, to
reinforce the link between performance and reward and to
reflect the shareholder experience.
Remuneration of Executive Directors
The Executive Directors’ remuneration is made up of:
•
Fixed elements, comprising base salary, benefits and pensions.
•
Performance related elements, comprising an annual bonus
and long-term incentive – the Blancco Performance
Share Plan.
During the year ended 30 June 2022, the Committee undertook
a review of the components of executive remuneration to ensure
they remain best positioned to support the delivery of our
forward-looking strategy and the creation of long-term value
for our shareholders. Given the extensive review and significant
changes to compensation which took place in the year ended
30 June 2021, it was concluded at this stage that the current
components of executive remuneration remain appropriate
and no further changes in remuneration structure
were recommended.
The Remuneration Committee however remains mindful of the
importance of environmental, social and governance (ESG)
measures in driving long-term sustainable growth. Sustainability
is core to the Company’s business model, and it is recognised
that the Company has a role to play in addressing its own
impact on climate change. In the year ended 30 June 2022,
the Company was pleased to announce it had achieved carbon
neutrality, a crucial milestone, by offsetting its Scope 1, 2, and 3
carbon emissions. Going forward, the Company aims to reduce
its emissions intensity on an annual basis and will continually
review its decarbonisation plan. Reflective of the criticality of
the Company’s objectives in this regard, the Remuneration
Committee has determined that a new ESG measure, focused on
carbon neutrality, be introduced into the annual bonus for the year
ending 30 June 2023.
Tom Skelton
Chair of Remuneration Committee
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Base salary
Base salaries are set by the Remuneration Committee each
year, after taking into consideration levels of responsibility, the
performance and experience of the individuals and salary levels
for similar positions in comparator companies and location.
Following a review in June 2021, the Committee agreed
to increase the CEO’s salary to US$405,562 per annum
(3% increase) and the CFO’s salary to £242,822 per annum
(2.5% increase) with effect from 1 July 2021. The CEO’s salary
was increased by a further 3% to US$417,728 per annum from 1
October 2021 in line with the wider US employee cost of
living increases.
The annual pay review for the Executive Directors for 2022/2023
will take place with effect from 1 October 2022 in line with the
wider employee population. It is anticipated that the pay review for
the Executive Directors will be no higher than that received by the
wider employee population.
Benefits in kind
These principally comprise car benefits, life assurance, permanent
health insurance and membership of the Group’s healthcare
insurance scheme or payment in lieu of benefits. Benefits do not
form part of pensionable earnings.
Pensions
The Group makes defined contributions into individual pension
plans. The CEO receives a pension contribution of 4% of base
salary up to the annual pension cap which was US$27,000 for
2021/2022. The CFO receives a total pension contribution of 4%
of base salary, which due to tax regulations is taken as pension
contribution of 1.68% of base salary and a cash allowance of
2.32%. Pension contributions for both the CEO and CFO are in
line with the approach for the US and UK workforce, respectively.
The amounts payable in the financial year are set out in the
Directors’ emoluments table on page 71.
Annual bonuses
Annual bonuses for the Executive Directors are typically
determined by reference to performance targets based on the
Group’s financial results and individual personal objectives set
at the beginning of the financial year.
Operation for the year ended 30 June 2022
For the year ended 30 June 2022 the core bonus potential for
the CEO and CFO was 100% of salary (maximum opportunity of
125% of salary including the ‘kicker’). The operation of the ‘kicker’,
which was introduced three years ago in order to drive exceptional
levels of performance, enables participants to earn up to 125%
of their core annual bonus opportunity for the achievement of
superior performance above that which is required for the
core award.
The annual bonus was based on two-thirds revenue targets and
one-third personal objectives, subject to a minimum level of
attainment on adjusted operating profit. The minimum level of
attainment on adjusted operating profit was achieved. Revenue
for the year on a constant currency basis, and excluding the
contribution of WipeDrive, was £40.5 million which exceeded the
£39.9 million target set for the core bonus. As a result, 100% of
the financial element of the core bonus will pay out. The stretch
target set for the ‘kicker’ was also partially met.
In addition, strong individual contributions from both Executive
Directors resulted in 95% delivery of the CEO’s personal
objectives and 100% delivery of the CFO’s personal objectives.
Key achievements against personal objectives include:
CEO –– driving long-term vision and strategy for the Company,
resulting in a robust financial position, building a strong and
diverse workforce with employee engagement at an all-time high
of 84%, successfully embedding structural changes with a hybrid
work environment now in place across all offices and driving
Blancco to a leadership position in ESG.
CFO – leading the development and implementation of the Group
ESG strategy to a position of carbon neutrality, successfully
driving the long-term financial strategy and reviewing the global
office space requirements, resulting in one office lease not being
renewed and office space being reduced in another office as a
result in the change in working patterns.
With the ‘kicker’ applied to both the achievement of financial
targets and personal objectives, the overall bonus pay out for
the CEO was 106% of base salary and for the CFO was 108% of
base salary.
Operation for the year ending 30 June 2023
For the year ending 30 June 2023, the structure of the annual
bonus has been amended to incorporate a target focused on
maintaining carbon neutrality. The new structure will be as follows:
•
65% based on financial target (revenue).
•
25% based on the achievement of agreed personal objectives.
•
10% based on maintaining carbon neutrality.
The entire annual bonus will remain subject to a minimum level of
attainment on adjusted operating profit.
Personal objectives for the CEO relate to driving the long term
vision and strategy for the company, continuing to build a strong
and diverse workforce and ensuring the company builds on the
internal momentum for its ESG program, and for the CFO relate
to continuing to lead the company initiatives on ESG, ensuring
the company maintains carbon neutrality status, and continuing
to review and make proposals in respect to global office space
requirements with new hybrid working models in place.
The core bonus for the CEO and CFO will remain unchanged at
100% of base salary per annum (maximum opportunity of 125%
of salary including the ‘kicker’).
Blancco Performance Share Plan
The Company has in place a long-term incentive plan – the
Blancco Performance Share Plan (the Plan) – to incentivise
Executive Directors and senior management to drive long term
sustainable growth for shareholders.
It is intended that annual awards will be granted under the plan
to Executive Directors and senior management. The awards will
be subject to stretching performance conditions over a three-
year period which will be selected annually by the Remuneration
Committee prior to the grant of awards and will closely align to the
Company’s key business objectives.
Vesting of grants made in the year ended
30 June 2020
On 2 October 2019 Matt Jones was granted an award over
325,191 ordinary shares of 2p each in the Company in the form of
conditional shares under the Plan. This corresponded to 130% of
salary. On 2 October 2019 Adam Moloney was granted an award
over 111,482 ordinary shares of 2p each in the Company in the
form of conditional Shares under the Plan. This corresponded to
60% of salary.
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Blancco Performance Share Plan continued
The vesting of these awards was based 33% on Invoiced Revenue, 33% on adjusted operating cash flow and 33% on adjusted
operating profit, all excluding WipeDrive revenue and on a constant currency basis, as set out in the table below. Performance was
assessed based on the outcome for the year ended 30 June 2022.
Measure
Weighting
Threshold
25% vesting
Target 50% vesting
Maximum 100%
vesting
Performance
outcome
for year ended
30 June 2022
Percentage vesting
Invoiced revenue
33%
£43.2m
£45.6m
£48.0m
£40.5m
0%
Adjusted operating cash flow
33%
£8.5m
£9.0m
£9.5m
£11.0m
33%
Adjusted operating profit
33%
£5.5m
£5.9m
£6.4m
£6.6m
33%
Total vesting
66% of maximum
Overall, the PSP will vest at 66% of the granted award upon completion of the audit of the financial statements for the year. There was
no discretion exercised on the outcome of the PSP.
Operation for grants made in the year ended 30 June 2022
On 14 December 2021 Matt Jones was granted an award over 192,477 ordinary shares of 2p each in the Company in the form of
conditional shares under the Plan. This corresponded to 170% of salary. On 14 December 2021 Adam Moloney was granted an
award over 70,846 ordinary shares of 2p each in the Company in the form of nil cost options under the Plan. This corresponded to
80% of salary.
These awards will vest based 33% on revenue, 33% adjusted operating cash flow and 33% adjusted operating profit. These measures
were selected to support the delivery of long-term success of the business and increasing value for shareholders. Performance will be
assessed based on outcomes for the year ended 30 June 2024 against the following targets, and awards will vest when the Committee
determines the extent to which the Performance Conditions have been satisfied, which will usually be upon Board approval of the
audited financial accounts for that year.
Measure
Weighting
Threshold
(25% vesting)
Target
(50% vesting)
Maximum
(100% vesting)
Revenue
33%
£44.7m
£49.9m
£55.5m
Adjusted operating cash flow
33%
£9.2m
£9.8m
£10.4m
Adjusted operating profit
33%
£5.4m
£5.6m
£5.9m
The targets are measured in terms of constant currency to allow for the participant to neither benefit from, nor be disadvantaged by,
currency movements.
When assessing the level of vesting in respect of the revenue portion the Committee will also consider the profitability of such revenue
to ensure that growth in revenue reflects value creation for shareholders. The Committee retains the discretion to adjust the vesting
outcome if it is not considered to be reflective of underlying financial or non-financial performance of the business or the performance
of the individual over the performance period or where the outcome is not considered appropriate in the context of the experience of
shareholders or other stakeholders.
Operation of grants to be made in the year ending
30 June 2023
Following the extensive review and increase last year, the normal
long-term incentive opportunity for the CEO and CFO will remain
at 170% and 80% of salary, respectively.
Performance measures also remain unchanged from prior years.
These awards will therefore be based one-third on revenue,
one-third on adjusted operating profit and one-third on adjusted
operating cash flow.
Other key points related to the operation of the Plan are as follows:
•
Awards will receive dividend equivalents, to reflect the value of
any dividends paid during the vesting period.
•
The Plan limits shareholder dilution to 10% of the issued share
capital over a ten-year period. This dilution limit applies to
newly issued shares under all Group share incentive plans.
•
There are malus and clawback provisions for all awards
under the Plan, which allow the Remuneration Committee to
reduce or clawback awards made, in the event of a material
misstatement of the accounts; error in assessing the
performance condition; material failure of risk management;
serious reputational damage; or gross misconduct on the
part of the participant. The malus and clawback provisions
will apply, unless the Remuneration Committee determines
otherwise, for a period of five years from the date of grant.
•
Where an individual leaves the Group they would normally lose
their awards, unless the Remuneration Committee determines
that they should be treated as a ‘good leaver’ in which case
they would be allowed to keep their awards. A participant
is classified a ‘good leaver’ in the case of ill-health, injury,
disability, the individual’s employing company or business
being sold out of the Group or any other reason at the
discretion of the Remuneration Committee. Awards for good
leavers would normally be retained post leaving and vest on
the normal vesting date and would normally be pro-rated for
time and performance (where applicable).
•
Awards would normally vest on a change of control. In these
circumstances awards would normally be pro-rated for time
and would vest taking into account performance achieved.
As of 30 June 2022, dilution in respect of Blancco share awards
granted in the last 10 years represented 4.4% of the Company’s
issued share capital.
Remuneration Committee Report continued
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Service contracts
The CEO and CFO have both entered into service agreements
with the Company. The agreement with the CEO provides for
12 months’ notice from the Company and six months’ notice
from the executive. The agreement with the CFO provides for six
months’ notice from both the Company and the executive. Under
the service agreements a payment in lieu of notice may be made
in respect of salary and benefits only.
Payments to past Directors
No payments were made to past Directors during the year.
Non-executive Directors’ remuneration
Non-executive Directors are appointed for a specified term,
being an initial three-year period subject to their re-election
by shareholders at the first AGM after their appointment. The
initial three-year period may be extended for further three-year
terms, at the discretion of the Board and subject to the ongoing
requirement for re-election by shareholders under the Company’s
articles. On termination, no compensation is payable other than
outstanding fees.
The Non-executive Directors receive fees which are set by the
Board as a whole. For UK based directors, the current fee is
£45,000 per annum. For Tom Skelton, who is based in the US, the
current fee is US$66,216 per annum. A further amount is payable
to each of the Chairs of the Audit and Remuneration Committees
to reflect the additional responsibilities and time commitments of
these roles.
Up to 30 June 2022 this was £6,000 per annum for UK based
directors and US$8,340 per annum for the US based director.
The Board Chair receives an annual fee of £95,000 per
annum which reflects the additional responsibilities and time
commitment required for this role. This remains unchanged.
There have been no changes in Non-executive Director fees
during the year or since the year end. No incentives, pensions or
other benefits are available to the Non-executive Directors.
The Board may request Non-executive Directors to perform specific additional work at an agreed day rate. It would be the intention of
the Board that the Directors’ independence is not prejudiced by the nature of any such additional work, and none was undertaken during
the year to 30 June 2022.
Audited details of the Directors’ emoluments are given below.
Salary and fees
2022
£’000
Benefits
2022
£’000
Annual bonus
2022
£’000
Pension
contributions
2022
£’000
Total
2022
£’000
Total
2021
£’000
Current Executive Directors
Matt Jones1
310
11
372
9
702
632
Adam Moloney
248
2
262
4
516
513
558
13
634
13
1,218
1,145
Non-executive Directors
Frank Blin
51
–
–
–
51
48
Catherine Michel
45
–
–
–
45
45
Philip Rogerson
20
–
–
–
20
47
Tom Skelton1
56
–
–
–
56
51
Rob Woodward
95
–
–
–
95
95
267
–
–
–
267
286
Total
825
13
634
13
1,485
1,431
1 Remuneration for Matt Jones and Tom Skelton is paid in US Dollars and is therefore subject to exchange rate fluctuations when translated into Sterling.
Directors’ beneficial interests in shares
The interests of the Directors who held office at 30 June 2022 and their connected parties in the ordinary share capital of the Company
are as shown in the table below.
As at
30 June 2022
Number
As at
30 June 2021
Number
Executive Directors
Matt Jones
362,962
159,232
Adam Moloney
179,316
28,000
Non-executive Directors
Frank Blin
37,893
37,893
Catherine Michel
–
–
Tom Skelton
35,000
35,000
Rob Woodward
42,134
42,134
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Directors’ interests in share awards
The interests of the Executive Directors in awards under the Performance Share Plan described earlier in this report, are shown in the
table below.
Year of assessment
and vesting
Awards outstanding at
01July 2021
Awards granted
during the year
Awards exercised
during the year
Awards outstanding at
30 June 2022
Date of grant
Matt Jones
2021
407,455
–
(407,455)
–
5 November 2018
Matt Jones
2022
325,191
–
–
325,191
2 October 2019
Matt Jones
2023
202,439
–
–
202,439
11 November 2020
Matt Jones
2024
–
192,477
–
192,477
14 December 2021
Total
935,085
192,477
(407,455)
720,107
Adam Moloney
2021
302,632
–
(302,632)
–
25 July 2018
Adam Moloney
2022
111,482
–
–
111,482
2 October 2019
Adam Moloney
2023
74,614
–
–
74,614
11 November 2020
Adam Moloney
2024
–
70,846
–
70,846
14 December 2021
Total
488,728
70,846
(302,632)
256,942
No other Directors had any interest in awards under the Performance Share Plan.
Signed on behalf of the Remuneration Committee:
Tom Skelton
Chair of the Remuneration Committee
27 September 2022
Remuneration Committee Report continued
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with applicable law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the group financial statements in accordance with
UK-adopted international accounting standards and the company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and company and of the
profit or loss of the group for that period. In preparing the financial
statements, the directors are required to:
•
select suitable accounting policies and then apply them
consistently;
•
state whether applicable UK-adopted international accounting
standards have been followed for the group financial
statements and United Kingdom Accounting Standards,
comprising FRS 101 have been followed for the company
financial statements, subject to any material departures
disclosed and explained in the financial statements;
•
make judgements and accounting estimates that are
reasonable and prudent; and
•
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and
company will continue in business.
The directors are responsible for safeguarding the assets of the
group and company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Statement of directors’ responsibilities in respect of the financial statements
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
group’s and company’s transactions and disclose with reasonable
accuracy at any time the financial position of the group and
company and enable them to ensure that the financial statements
comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The directors consider that the Annual Report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the group’s and company’s position and performance, business
model and strategy.
On behalf of the Board
Adam Moloney
Chief Financial Officer
Corporate Governance
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Blancco Technology Group plc | Annual Report and Accounts 2022
Financial
Statements
Financial Statements
Independent auditors’ report
.075
Consolidated Income Statement
.080
Consolidated Statement of Comprehensive Income .081
Consolidated Balance Sheet
.082
Consolidated Statement of Changes in Equity
.084
Consolidated Cash Flow Statement
.085
Notes to the Accounts
.087
Company Balance Sheet
.110
Company Statement of Changes in Equity
.111
Notes to the Company Financial Statement
.112
Additional information
Notice of AGM
.116
Glossary
.119
Financial Statements
.074
Blancco Technology Group plc | Annual Report and Accounts 2022
Independent auditors’ report to the members of Blancco Technology Group plc
Report on the audit of the financial statements
Opinion
In our opinion:
•
Blancco Technology Group plc’s group financial statements and company financial statements
(the “financial statements”) give a true and fair view of the state of the group’s and of the
company’s affairs as at 30 June 2022 and of the group’s profit and the group’s cash flows for
the year then ended;
•
The group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
•
The company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
•
The financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the
“Annual Report”), which comprise: the Consolidated and Company Balance Sheets as at 30 June
2022; the Consolidated Income Statement and Consolidated Statement of Comprehensive
Income, the Consolidated Cash Flow Statement and the Consolidated and Company Statements
of Changes in Equity for the year then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical
Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
Our audit approach
Context
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. As in all of
our audits we also addressed the risk of management override of internal controls, including
evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Overview
Audit scope
•
Audit procedures provide coverage of 100% of the Group’s revenues.
•
Audit scope includes performing procedures over thirteen legal entities located in nine
different countries.
•
Four financially significant components in UK, USA, Japan and Germany.
Key audit matters
•
Revenue recognition (group)
•
Capitalisation of development costs (group)
•
Accounting for the acquisition of WipeDrive (group)
•
Carrying value of intercompany receivables and investments (parent)
Materiality
•
Overall group materiality: £398,000 (2021: £365,000) based on 1% of revenues.
•
Overall company materiality: £1,141,000 (2021: £1,012,000) based on 1% of total assets.
•
Performance materiality: £298,500 (2021: £273,750) (group) and £855,750
(2021: £759,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most
significance in the audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon, were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Accounting for the acquisition of WipeDrive is a new key audit matter this year. The risk posed by
COVID-19, which was a key audit matter last year, is no longer included because of a reduction in
the relative level of assessed audit risk associated with COVID-19 in the current year. Otherwise,
the key audit matters below are consistent with last year.
Financial Statements
.075
Blancco Technology Group plc | Annual Report and Accounts 2022
Key audit matter
How our audit addressed the key audit matter
Revenue recognition (group)
The timing of software based revenue recognition
may involve judgement. Because of the Group’s
varied contracts and offerings, judgement is
applied in assessing whether the conditions for
recognising revenue under the Group’s accounting
policies have been met and whether the revenue
has been recognised in the correct period.
In addition, ISAs (UK) presume there is a risk
of fraud in revenue recognition for every audit
because of the pressure management may feel
to achieve the forecast results. The accounting
policy and revenue disclosures can be found
in note 1.10 and note 3 to the financial
statements respectively.
Group revenue was considered as a single population,
so that revenue transactions from every revenue
generating entity in the Group were included in the
population from which we selected our sample for
testing. We examined a sample of high-value licence
contracts and also selected a haphazard sample
of additional contracts and assessed whether the
revenue recognition methodology and the Group’s
accounting policy were consistent with accounting
standards and had been applied consistently. We
inspected the contract terms and, where relevant,
proof of delivery, together with cash receipt in order
to assess whether the revenue had been recognised
appropriately in accordance with the Group’s policy
and in the correct period.
For a sample of revenue recognised from licences
sold shortly before the year end, we checked that all
performance obligations had been satisfied prior to the
year end, such that recognition of licence revenue in
accordance with IFRS 15 in the period was appropriate.
In response to the presumed risk of fraud, where
revenue was adjusted through journal entries
displaying unusual account combinations, we tested
a sample of journals to establish whether they were
indicative of fraud.
The work performed shows no indication that revenue
is materially misstated because of fraud or error.
Capitalisation of development costs (group)
The Group spends a significant amount
in developing new products and product
functionality. As set out in note 15, during
the current year the Group has capitalised
£4.1 million of internal development expenditure
within intangible assets and had a net book
value of £9.3 million of capitalised development
expenditure at 30 June 2022. We focused on this
area due to the value of the costs capitalised, and
the fact that judgement is involved in assessing
whether the criteria set out in IAS 38 “Intangible
Assets” (“IAS 38”) required for capitalisation of
such costs have been met, particularly:
• The appropriateness of and support for the
costs capitalised; and
• The likelihood of the project delivering
sufficient future economic benefits
We obtained a breakdown, by value, of all
development expenditure capitalised in the period
and reconciled this to the amounts recorded in the
general ledger. Capitalised development expenditure
principally comprises internal labour costs. To
determine whether labour costs were correctly
capitalised, we agreed a sample of capitalised internal
labour costs to supporting payroll and time records
which include the allocation of how much time is
capitalised to each project category.
We obtained a schedule of projects that the
development expenditure related to. We updated our
understanding of each project through discussions
with management and considered evidence of
technical feasibility, technical and financial resources
available to complete the projects and of the Group’s
ability to sell the asset developed, to confirm the
projects were being accounted for appropriately
in accordance with IAS 38 “Intangible Assets”. No
material exceptions were noted in our testing.
Key audit matter
How our audit addressed the key audit matter
Accounting for the acquisition of WipeDrive
(group)
WipeDrive Inc was acquired in June 2022 for
a total consideration of £8.4 million settled
in a combination of cash and contingent
consideration. £6.5 million of goodwill and
£2.6 million of intangible assets were recognised
as part of the acquisition accounting. These
are material balances and subject to a number
of estimates in determining their valuation.
Management performed a purchase price
allocation exercise that involved fair valuing the
assets acquired, including separately identifiable
intangible assets, comprising technology,
customer contracts, and brands (see note 13) to
the consolidated financial statements.
With the assistance of our internal valuation
specialists, we assessed the assumptions used
in determining the fair value of the acquired
intangible assets and tested the methodology
for reasonableness. In particular:
• We assessed the completeness of identified
intangible assets, and the valuation methods
used to determine the fair value;
• We considered the discount rate used by
management to value the intangible assets;
• We considered the reasonableness of the
underlying cashflow forecasts which formed the
basis for determining the fair values by comparing
the cash flows to historical performance and
considering the growth rates applied.
We also tested the acquisition balance sheet by
agreeing the material balances to supporting
information. We agreed the cash consideration
paid to the acquisition agreement and supporting
bank statements.
We obtained management’s calculation for
the fair value and accounting policy alignment
adjustments recognised on acquisition and
agreed the adjustments recognised to supporting
documentation evidencing the amount and existence
of the contingency or accounting policy difference
giving rise to the adjustment at the acquisition date.
We also obtained management’s calculation for
the contingent consideration and confirmed the
calculation methodology agreed to the acquisition
agreement and the estimates made by management
were reasonable based on the information available
at 30 June 2022. We found no material exceptions in
our testing.
Carrying value of intercompany receivables and
investments (parent)
The Company holds material investments in
and balances due from subsidiaries, as detailed
in note 5 and note 6 to the Company financial
statements respectively. The assessment of
whether these balances are impaired involves
significant judgement by the Directors. IFRS 9
requires the Directors to determine an expected
credit loss on the balances due from subsidiaries.
This has been identified as a key audit matter due
to the size of the balances and the estimation
involved in determining the recoverable value.
For the balances due from subsidiaries, we reviewed
the methodology used by the Directors in calculating
the expected credit loss provision and compared the
probability of default to external credit rating agency
benchmarks. No exceptions were noted from
this testing.
For the investments in subsidiaries we considered
the recoverable value of the investment by
comparing to the market capitalisation of the Group
at 30 June 2022, including the value of the balances
due from subsidiaries. No exceptions were noted
from our testing.
Independent auditors’ report to the members of Blancco Technology Group plc continued
Report on the audit of the financial statements
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole, taking into account the structure of the Group and the
Company, the accounting processes and controls, and the industry in which they operate. The Group
is structured as one core operating business focussed on the development and sale of data erasure
and device diagnostic services, comprised of 26 separate legal entities across 15 countries.
In establishing the overall approach to the Group audit, we determined the type of work to be
performed at the legal entities by us, as the Group engagement team, or component auditors
from other PwC network firms operating under our instruction. Only one component auditor was
engaged and we determined the level of involvement we needed to have in the audit work of the
component auditor to be able to conclude on whether sufficient appropriate audit evidence had
been obtained as a basis for our opinion on the Group financial statements as a whole.
Of the Group’s 26 legal entities, we identified four legal entities in the UK, USA, Japan and Germany
as requiring an audit of their complete financial information based on their contribution to the
Group’s revenue. To further increase the level of coverage over the Group’s income statement and
balance sheet, we also performed an audit of the complete financial information for a further three
legal entities covering the UK and Finland.
We identified a further six legal entities, in the USA, Ireland, Australia, Singapore and India where
specified audit procedures were performed over certain financial statement line items to ensure
sufficient coverage of those line items was obtained for the purposes of our Group audit opinion.
Group revenue was considered as a single population, so that revenue transactions from every
revenue generating entity in the Group were included in the population from which we selected our
sample for testing.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Financial statements – group
Financial statements – company
Overall
materiality
£398,000 (2021: £365,000)
£1,141,000 (2021: £1,012,000)
How we
determined it
Based on 1% of revenues
Based on 1% of total assets
Rationale for
benchmark
applied
Revenue is considered to be an
appropriate benchmark as it is one of
the Group’s KPIs and a primary measure
used by shareholders in assessing the
performance of the Group. We noted that
using a profit-based benchmark would
result in an inappropriately low benchmark
which would not be a useful basis for
determining materiality.
We believe that total assets is the primary
measure used by the shareholders
in assessing the performance of the
Company, and is a generally accepted
benchmark. This has been capped at a
level below that of the Group materiality for
the purposes of the Group audit.
For each component in the scope of our group audit, we allocated a materiality that is less than
our overall group materiality. The range of materiality allocated across components was between
£23,054 and £250,000.
We use performance materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our audit and the nature and extent of
our testing of account balances, classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to
£298,500 (2021: £273,750) for the group financial statements and £855,750 (2021: £759,000) for
the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of
misstatements, risk assessment and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements
identified during our audit above £19,900 (group audit) (2021: £18,250) and £19,900 (company
audit) (2021: £18,250) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Financial Statements
.077
Blancco Technology Group plc | Annual Report and Accounts 2022
With respect to the Strategic Report and Directors’ Report, we also considered whether the
disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also
to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in
the Strategic Report and Directors’ Report for the year ended 30 June 2022 is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment
obtained in the course of the audit, we did not identify any material misstatements in the Strategic
Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities in respect of the financial
statements, the directors are responsible for the preparation of the financial statements in accordance
with the applicable framework and for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and
the company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-
compliance with laws and regulations related to income tax regulations in the different jurisdictions
in which the Group operates, AIM Rules and the Companies Act 2006, and we considered
the extent to which non-compliance might have a material effect on the financial statements.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to
adopt the going concern basis of accounting included:
•
Discussions with management and the Directors regarding future plans for the Group and Company,
including consideration of known future events such as the ongoing impact of COVID-19;
•
Considering the Group’s compliance with the terms of the revolving credit facility;
•
Comparing the trading results of the Group and Company subsequent to the year end to the
forecasts for that period, as well as assessing historical forecasting accuracy with respect to
prior years;
•
Assessing the Directors’ future forecasts, including reconciling them to the latest Board
approved budgets, testing the mathematical accuracy of the underlying forecast, assessing
the basis for the underlying assumptions and performing sensitivity analysis on the key
assumptions; and
•
Assessing the severe but plausible downside scenario forecast prepared by the Directors to
consider whether sufficient resources are available at Group and Company level in the event
that the severe but plausible scenario were to occur.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s and
the company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a
guarantee as to the group’s and the company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the
financial statements and our auditors’ report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated
in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we
are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
Independent auditors’ report to the members of Blancco Technology Group plc continued
Report on the audit of the financial statements
Financial Statements
.078
Blancco Technology Group plc | Annual Report and Accounts 2022
We evaluated management’s incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls), and determined that the principal
risks were related to the posting of inappropriate journal entries to manipulate reported results
and management bias in accounting estimates. The group engagement team shared this risk
assessment with the component auditors so that they could include appropriate audit procedures
in response to such risks in their work. Audit procedures performed by the group engagement
team and/or component auditors included:
•
Discussions with management and the Directors regarding actual and potential litigations and
claims, including known or suspected instances of non-compliance with laws and regulation
and fraud;
•
Reading relevant meeting minutes, including those of the Board of Directors and Audit Committee;
•
Evaluating the Group and Company controls designed to prevent and detect irregularities;
•
Identifying and testing journal entries, in particular certain journal entries posted with unusual
account combinations;
•
Designing audit procedures to incorporate unpredictability around nature, timing and extent of
our testing; and
•
Challenging assumptions and judgements made by management and the Directors in their
significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain.
There are inherent limitations in the audit procedures described above. We are less likely to
become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances,
possibly using data auditing techniques. However, it typically involves selecting a limited number of
items for testing, rather than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases, we will use audit sampling
to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members
as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
We have not obtained all the information and explanations we require for our audit; or
•
Adequate accounting records have not been kept by the company, or returns adequate for our
audit have not been received from branches not visited by us; or
•
Certain disclosures of directors’ remuneration specified by law are not made; or
•
The company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Simon Ormiston (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
27 September 2022
Financial Statements
.079
Blancco Technology Group plc | Annual Report and Accounts 2022
Consolidated Income Statement
for the year ended 30 June 2022
Continuing operations
Note
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£000
Revenue
3
39,799
36,506
Cost of sales
(1,290)
(2,807)
Gross profit
38,509
33,699
Administrative expenses (including depreciation and amortisation)
(36,627)
(31,925)
Operating profit
1,882
1,774
Acquisition costs
5
542
–
Exceptional income
5
–
(837)
Amortisation of acquired intangible assets
2,683
2,859
Share-based payments charge
29
1,387
1,490
Adjusted administrative expenses
(32,015)
(28,413)
Adjusted operating profit
6,494
5,286
Finance income
9
6
121
Finance costs
9
(201)
(420)
Profit before tax
1,687
1,475
Taxation
10
364
(95)
Profit for the year from continuing operations
2,051
1,380
Discontinued operations
Post tax profit from discontinued operations
7
–
331
Profit for the year
6
2,051
1,711
Attributable to:
Equity holders of the Company
2,024
1,697
Non-controlling interests
18
27
14
Profit for the year
2,051
1,711
Earnings per share
Continuing operations:
Basic
11
2.71 p
1.84 p
Diluted
11
2.64 p
1.78 p
Discontinued operations:
Basic
11
0.00 p
0.45 p
Diluted
11
0.00 p
0.43 p
Total Group:
Basic
11
2.71 p
2.29 p
Diluted
11
2.64 p
2.21 p
Financial Statements
.080
Blancco Technology Group plc | Annual Report and Accounts 2022
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£000
Profit for the year
2,051
1,711
Other comprehensive income/(expense) – amounts that may be reclassified to profit
or loss in the future:
Exchange differences arising on translation of foreign entities
1,632
(5,862)
Total comprehensive profit/(loss) for the year
3,683
(4,151)
Attributable to:
Equity holders of the Company
3,691
(4,049)
Non-controlling interests
(8)
(102)
Total comprehensive profit/(loss) for the year
3,683
(4,151)
Financial Statements
.081
Blancco Technology Group plc | Annual Report and Accounts 2022
Consolidated Balance Sheet
as at 30 June 2022
Note
30 June
2022
£’000
30 June
2021
£000
Assets
Non-current assets
Goodwill
14
56,040
48,199
Other intangible assets
15
19,928
19,369
Property, plant and equipment
16
2,970
2,249
Deferred tax assets
27
107
119
79,045
69,936
Current assets
Inventory
19
216
110
Trade and other receivables
20
8,954
6,204
Current tax asset
641
469
Cash and cash equivalents
21
8,195
10,071
18,006
16,854
Total assets
97,051
86,790
Current liabilities
Trade and other payables
22
(9,433)
(7,767)
Contingent consideration
(1,347)
–
Current tax liability
(291)
(336)
(11,071)
(8,103)
Non-current liabilities
Borrowings
23
(2,000)
–
Other payables
22
(2,265)
(1,131)
Deferred tax liabilities
27
(3,971)
(2,655)
(8,236)
(3,786)
Total liabilities
(19,307)
(11,889)
Net assets
77,744
74,901
Financial Statements
.082
Blancco Technology Group plc | Annual Report and Accounts 2022
Note
30 June
2022
£’000
30 June
2021
£000
Equity
Called up share capital
28
1,513
1,512
Share premium account
28
21,103
21,103
Merger reserve
28
5,861
5,861
Capital redemption reserve
28
417
417
Translation reserve
28
1,857
190
Retained earnings
46,438
45,255
Total equity attributable to equity holders of the Company
77,189
74,338
Non-controlling interest reserve
18
555
563
Total equity
77,744
74,901
The financial statements on pages 80 to 109 were approved by the Board of Directors and authorised for issue on 27 September 2022.
These were signed on its behalf by:
Adam Moloney
Chief Financial Officer
Company number: 05113820
Consolidated Balance Sheet continued
as at 30 June 2022
Financial Statements
.083
Blancco Technology Group plc | Annual Report and Accounts 2022
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Called
up share
capital
£’000
Share
premium
account
£’000
Merger
reserve
£’000
Translation
reserve
£’000
Retained
earnings
£’000
Non-
controlling
interest
reserve
£’000
Capital
redemption
reserve
£’000
Total
£’000
Balance as at 1 July 2020
1,507
21,103
5,861
5,936
41,861
665
417
77,350
Comprehensive income:
Profit for the year
–
–
–
–
1,697
14
–
1,711
Other comprehensive expense
Exchange differences arising on translation of foreign entities
–
–
–
(5,746)
–
(116)
–
(5,862)
Total comprehensive loss
–
–
–
(5,746)
1,697
(102)
–
(4,151)
Transactions with owners recorded directly in equity:
Issue of shares
5
–
–
–
(5)
–
–
–
Share based payment charge inclusive of deferred tax charge
–
–
–
–
1,702
–
–
1,702
Balance as at 30 June 2021
1,512
21,103
5,861
190
45,255
563
417
74,901
Comprehensive income:
Profit for the year
–
–
–
–
2,024
27
–
2,051
Other comprehensive expense
Exchange differences arising on translation of foreign entities
–
–
–
1,667
–
(35)
–
1,632
Total comprehensive profit
–
–
–
1,667
2,024
(8)
–
3,683
Transactions with owners recorded directly in equity:
Issue of shares
1
–
–
–
–
–
–
1
Purchase of Company’s own shares
–
–
–
–
(1,546)
–
–
(1,546)
Share based payment charge inclusive of deferred tax credit
–
–
–
–
705
–
–
705
Balance as at 30 June 2022
1,513
21,103
5,861
1,857
46,438
555
417
77,744
Financial Statements
.084
Blancco Technology Group plc | Annual Report and Accounts 2022
Consolidated Cash Flow Statement
for the year ended 30 June 2022
Note
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£’000
Profit for the year
2,051
1,711
Adjustments for:
Profit from discontinued operations
7
–
(331)
Net finance costs
9
195
299
Taxation
10
(364)
95
Loss on disposal of intangible assets
6
–
66
Profit on disposal of property, plant and equipment
6
–
(6)
Depreciation of property, plant and equipment
6
1,119
1,129
Amortisation of intangible assets
6
3,923
3,753
Amortisation of acquired intangible assets
6
2,683
2,859
Share-based payments expense
29
1,387
1,490
Operating cash flow before movement in working capital
10,994
11,065
Acquisition costs
542
–
Exceptional income
–
(837)
Adjusted EBITDA
11,536
10,228
Increase in inventories
(69)
(19)
(Increase)/decrease in receivables
(2,092)
588
Increase/(decrease) in payables and accruals
1,496
(1,249)
Cash generated from continuing operations
10,329
10,385
Acquisition costs payments
355
252
Share-based payments
143
155
Adjusted operating cash flow
10,827
10,792
Interest paid on lease liabilities
(110)
(95)
Other bank charges paid
(25)
(242)
Tax (paid)/received
(261)
228
Net cash generated from operating activities – continuing operations
9,933
10,276
Net cash generated from operating activities – continuing and discontinued
operations
9,933
10,276
Cash flows from investing activities
Purchase of property, plant and equipment
(157)
(235)
Purchase and development of intangible assets
(4,453)
(4,876)
Acquisition of subsidiaries, net of cash acquired
12
(6,873)
(319)
Net cash used in investing activities – continuing operations
(11,483)
(5,430)
Net cash used in investing activities – continuing and discontinued operations
(11,483)
(5,430)
Financial Statements
.085
Blancco Technology Group plc | Annual Report and Accounts 2022
Note
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£’000
Cash flows from financing activities
Payment of the principal portion of lease liabilities
(784)
(927)
Purchase of Company’s own shares
(1,546)
–
Share issue, net of fees
1
–
Interest refunded*
73
54
Interest paid*
(58)
(18)
Drawdown of borrowings
25
3,000
–
Repayment of borrowings
25
(1,000)
–
Net cash used in financing activities – continuing operations
(314)
(891)
Net cash used in financing activities – continuing and discontinued operations
(314)
(891)
Net (decrease)/increase in cash and cash equivalents
25
(1,864)
3,955
Other non-cash movements – exchange rate changes
(12)
(603)
Cash and cash equivalents at beginning of year
21
10,071
6,719
Cash and cash equivalents at end of year
21
8,195
10,071
Borrowings
(2,000)
–
Net funds
24, 25
6,195
10,071
* Interest refunded and interest paid has been reclassified from operating activities to financing activities to better reflect the nature of the cashflows.
Consolidated Cash Flow Statement continued
for the year ended 30 June 2022
Financial Statements
.086
Blancco Technology Group plc | Annual Report and Accounts 2022
Notes to the Accounts
for the year ended 30 June 2022
1. General Information
Blancco Technology Group Plc is a public limited company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. Details of its registered office are included
on page 54, and the nature of the Group’s operations and principal activities are set out in the
Strategic Report from page 1. These financial statements are presented in thousands of pounds
sterling, which is the functional currency of the Company. Foreign operations are included in
accordance with the policies set out in note 1.5.
1.1 Basis of Preparation
The consolidated financial statements of Blancco Technology Group Plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards. The financial
statements have been prepared on a historical cost basis, except for certain financial assets and
liabilities which are measured at fair value. The principal accounting policies adopted are set out
below and have been consistently applied to all the years presented, unless otherwise stated.
1.2 Going Concern
The Group meets its day-to-day working capital through its cash reserves, overdraft facility, and a
revolving credit facility which expires in January 2024.
Further information on the Group’s business activities, together with the factors likely to affect
its future development, performance and position is set out in the Strategic Report from page 1,
which does not form part of the financial statements. Further information on the financial position
of the Group, its cash flow, liquidity position and borrowing facility is also described in the Strategic
Report. In addition, note 26 to the financial statements includes the Group’s objectives, policies
and processes for managing its capital, and its exposures to credit risk and liquidity risk.
After making enquiries, the Board has a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for a period of at least 12 months
from the date of these financial statements. Accordingly, they continue to adopt the going concern
basis in preparing the Annual Report and Accounts.
1.3 Changes in accounting policies
There are no changes to existing standards and interpretations that are relevant to the group for
year ended 30 June 2022.
At the date of approval of these financial statements, the following standards and interpretations,
which have not been applied in these financial statements, were in issue but not yet effective:
•
IFRS 17, ‘Insurance contracts’
•
A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual
improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16
•
Amendments to IAS 1, Presentation of financial statements’ on classification of liabilities*
•
Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8*
•
Amendment to IAS 12 – deferred tax relating to assets and liabilities arising from a
single transaction*
* Standards and interpretations not yet endorsed.
None of these amendments are expected to have a significant impact to the Group, however the
Group will continue to consider these and any additional amendments, interpretations and new
standards to identify potential future impact.
1.4 Basis of Consolidation
The consolidated financial statements aggregate the results, cash flow and balance sheets
of Blancco Technology Group Plc (“the Company”) and its subsidiary undertakings (together
the “Group”) drawn up to 30 June each year. A list of the Company’s subsidiary undertakings
including details of statutory year-ends that differ from the Group is given in note 18. The results of
subsidiary undertakings acquired during a financial year are included from the date of acquisition.
The financial statements of subsidiaries are prepared in accordance with the Group’s accounting
policies and to coterminous balance sheet dates.
Subsidiaries comprise the entities controlled by the Group. Control exists when the Group has
power over an entity, is exposed or has rights to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date
that commences.
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions are eliminated in preparing the consolidated financial statements. On
acquisition of a subsidiary, applicable assets and liabilities existing at the date of acquisition are
reflected at their fair values.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately
from the Group’s equity therein. Non-controlling interests consist of the amount of those interests
at the date of the original business combination and the share of the changes in equity since the
date of the combination. Acquisition of non-controlling interests’ equity stakes in the Group’s
subsidiaries are recorded directly through reserves, with a transfer of the non-controlling interests’
share of net assets directly to retained earnings on the date of acquisition.
1.5 Foreign Currencies
Transactions denominated in foreign currencies are translated into sterling at the exchange rate
ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated
into sterling at rates of exchange ruling at the balance sheet date. The income statements and
cash flow of overseas subsidiaries are translated into sterling at the weighted average exchange
rates applicable during the year and their assets and liabilities are translated at the rates ruling at
the balance sheet date. Exchange differences arising on the retranslation of opening net assets of
overseas subsidiaries, together with differences between income statement accounts at average
and closing rates, are included within other comprehensive income. All other exchange differences
are accounted for within the income statement.
Financial Statements
.087
Blancco Technology Group plc | Annual Report and Accounts 2022
1. General Information continued
1.6 Goodwill and Intangible Assets
Goodwill arising on consolidation represents the excess of the cost of the acquisition over the
Group’s interest in the fair value of the identifiable assets and liabilities of a business at the date
of the acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured
at cost less any accumulated impairment losses. Goodwill is reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and is not
subsequently reversed.
Goodwill and other intangible assets are reviewed for impairment annually, or, whenever there is
an indication that they may be impaired, by comparing the carrying value of the asset, or group of
assets, to its recoverable amount. Assets which do not generate cash inflows independent of other
assets, are aggregated into cash-generating units (CGUs) and the recoverable amount of the CGU
to which the asset belongs is estimated. The recoverable amount of an asset or CGU is the higher
of its fair value less costs to sell and its value in use.
The value in use is estimated by calculating the present value of its future cash flow. Impairment
charges are recognised in the income statement to the extent that the carrying value exceeds the
recoverable amount in the period in which the impairment is identified.
Separately Identifiable Intangible Assets Arising on Business Combinations
Other intangible assets, such as customer relationships, brand names and other intellectual
property, are recognised on business combinations if they are separable or arise from a legal
or contractual right. Separately identifiable intangible assets are amortised over their expected
future lives unless they are regarded as having indefinite useful lives, in which case they are not
amortised, but subject to an annual impairment test.
•
Customer relationships are being amortised on a straight-line basis over 1 to 12 years.
•
Brand names are being amortised on a straight-line basis over 1 to 14 years.
•
Intellectual property is being amortised on a straight-line basis over 5 to 10 years.
Amortisation of acquired intangibles is excluded from adjusted operating profit in the consolidated
income statement.
Development Expenditure
Expenditure on research and certain development activities which do not meet the criteria for
capitalisation is recognised as an expense in the period in which it is incurred. Any internally
generated development costs (including software development) are recognised as an asset only if
the following criteria are met:
•
There is technical feasibility to complete the asset to be available for sale and that there are
adequate resources available to complete development;
•
There is an intention to complete the asset;
•
The asset can be reasonably expected to generate future economic benefit;
•
The costs can be reliably measured; and
•
There is an ability to control, use or sell the product.
Amortisation of internally generated development expenditure is included within adjusted
operating profit in the consolidated income statement.
Where no internally generated intangible asset can be recognised, the development expenditure is
recognised as an expense in the period in which it is incurred.
Internally generated intangible assets are amortised on a straight-line basis over four years once
the asset is available for use.
Other Intangible Assets
Other intangible assets, such as purchased software, certification or costs of obtaining patents,
are initially measured at cost. Cost includes the purchase price of the assets and the directly
attributable cost of bringing the asset into its intended use. After initial recognition, the intangible
asset is carried at cost, less accumulated amortisation, less any accumulated impairment losses.
Amortisation is charged evenly over the assets’ estimated useful lives, which are between three and
five years. The amortisation is presented in the income statement within administrative expenses.
1.7 Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and accumulated
impairment losses. Subsequent costs are capitalised only when it is probable that they will result in
future economic benefits flowing to the Group and when they can be measured reliably. Depreciation
begins when the asset is available for use and is charged to the income statement on a straight-line
basis so as to write off the cost less residual value of the asset over its estimated useful life as follows:
Leasehold improvements –
over the period of the lease or life of the improvements if less
Computer equipment
–
25% - 33% per annum
Fixtures and fittings
–
16% - 50% per annum
The useful economic lives are reviewed on an annual basis to ensure that they are appropriate.
Gains and losses arising on the disposal of an asset are determined as the difference between the
sale proceeds and the carrying amount of the asset and are recognised in the income statement.
1.8 Inventories
Inventories and work in progress are stated at the lower of cost and net realisable value. The cost
of inventories is based on the first-in first-out principle and includes all direct expenditure that
has been incurred in bringing the inventories and work in progress to their present location and
condition. Net realisable value represents the estimated selling price less all estimated costs to be
incurred in marketing, selling and distribution. The amount of any write-down of inventories to net
realisable value is recognised as an expense in the year in which the write-down occurs.
1.9 Accruals and Provisions
A provision is recognised when there is a present obligation, whether legal or constructive, as a
result of a past event for which it is probable that a transfer of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Liability
classified provisions in respect of contingent consideration for acquisitions are made at fair value
of the likely consideration payable taking account of the performance criteria, which affect the level
of contingent consideration.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
1. General Information continued
1.9 Accruals and Provisions continued
Provisions are determined by discounting the expected future cash flow at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the
liability. The unwinding of the discount rate is recognised as a finance cost.
1.10 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and is net of value
added tax and other duties. Revenue is recognised when the delivery of goods or services has
taken place in accordance with the terms of the sale, there is certainty on the value, recoverability
is reasonably assured and control has transferred to the customer. Delivery is deemed to have
taken place when the customer has full access to use the product and there is no further supply
obligation for Blancco.
Revenue on software sales is recognised according to the terms of individual contracts, which fall
into two types; either a volume or subscription basis.
•
Volume contracts. Where Blancco products are sold on a volume basis a finite number of
“uses” are delivered. Revenue is recognised on delivery as this is the point at which control is
transferred to the customer and there are no continuing obligations to the Group.
•
Subscription contracts. Revenue is recognised at specific points throughout the contract
term at which point delivery has or (in the case of ongoing performance obligations) is expected
to take place. In the majority of cases, delivery takes place concurrently with the invoice being
issued, at the outset of a contract (or is part delivered if the customer is invoiced periodically),
and accordingly licence revenue closely aligns to the point the invoice is booked with no
revenue deferral. In cases where deliveries are expected to be made periodically throughout
the contract term, sufficient revenue will be deferred to reflect management’s best estimate of
licences still to be delivered. In cases where a customer has been delivered licences in advance
of an invoice being issued, a contract asset is recognised.
The majority of revenue is recognised at a point in time, when delivery takes place. A small number
of subscription contracts are recognised over time where the service or licence provision is
provided at a set level over a determined period. Revenue is recognised on a pro rata basis which
generally aligns to straight line recognition over the course of the contract.
Revenue billed in advance is deferred within contract liabilities. Revenue billed in arrears is
recognised in contract assets and discounted to net present value where this impact is material.
Discounting is required where a financing component exists on contracts. Our standard payment
terms are 30 days and contracts are not entered into with significant financing components. On
long term contracts, delivery is generally aligned with invoicing (either up front or periodically
throughout the term) such that the timing difference between revenue recognition and cash
collection is representative of our normal payment terms. The average days outstanding on
debtors is disclosed in note 26.
The key judgement involved in assessing the criteria for revenue recognition is the identification of
separate performance elements and their respective fair values, including assessing the underlying
economics of the transaction versus what is contractually agreed.
Bundled sales or multiple-element arrangements require the Group to deliver hardware and/or
a number of services under one agreement, or a series of agreements which are commercially
linked. Under such agreements, an assessment is made over the ability to identify and account
for each of the components separately, thereby identifying the different performance obligations.
In order for these components to be identified it is determined whether the component has
stand-alone value to the customer and whether the fair value of the component can be measured
reliably. If these criteria are deemed to be met the components are accounted for separately.
While all contracts are assessed on a case by case basis, for the majority of Blancco’s sales, all
components are measured separately except for:
•
Cases where two or more components are inherently linked. This can arise on contracts where
licences are sold with bespoke hardware or development and integration work, on the basis that
either component relies on the other in order to function as a complete product.
•
Product upgrades which are linked to the licence element of contracts on the basis that
these are unspecified, not required in order to maintain functionality of the product and
that product upgrades to existing customers are only a by-product of the Group’s product
development activity.
Where these elements are accounted for separately, the consideration received is allocated to
each of the identifiable components based on the relative fair values. Fair values are determined
on a hierarchical basis as follows:
•
Evidence where the Group sells on a stand-alone basis.
•
Evidence where the same or similar components are being sold by another third-party.
•
Cost of providing the service.
Blancco contracts a part of its revenue acting as an agent or reseller for third party licences
which are sometimes sold in isolation or as a bundle with other Blancco products. This revenue
is measured at fair value and recognised gross with a corresponding cost of sale on the basis
that Blancco:
•
Takes full title and ownership of the products prior to onward sale.
•
Is exposed to variable returns of the sales of the product.
•
Processes and decides on the best route to market for the equipment.
•
Has full discretion in identifying customers for onward sale of products and establishes the
selling price to these customers.
•
The revenue is recorded at the point that Blancco’s obligation to deliver the third party software
has been satisfied.
1.11 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net
profit as reported in the income statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
Financial Statements
.089
Blancco Technology Group plc | Annual Report and Accounts 2022
1. General Information continued
1.11 Taxation continued
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of the taxable profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise from the goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interest in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in the income statement, except when
it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
1.12 Employee Benefits
Pensions
The Group offers defined contribution pension arrangements to certain employees. Payments to
defined contribution pension schemes are expensed as incurred.
Share-based Payments
Performance Share Plan
The terms of the scheme in operation are detailed in note 29 to the accounts. The scheme is
treated as an equity settled scheme since the exercise can be settled in cash or shares at the
Company’s discretion, and the Company has historically settled such schemes in shares.
The fair values of the options granted under the equity settled scheme are recognised as an
employee expense with a corresponding increase in equity. The fair value is measured at grant
date and spread over the period during which the employees become entitled to the options. The
fair value of the awards granted is measured using the average share price on the day preceding
the grant date and the number of shares the employee is awarded. The fair value of the awards
is reassessed at each reporting date based on the likelihood of achieving the vesting criteria and
the likely level of attainment of the vesting criteria. Any corresponding change in the fair value
is recorded as an expense or credit in the income statement with a corresponding increase or
decrease in equity.
Sharesave Scheme (SAYE)
The terms of the sharesave scheme are detailed in note 29 to the accounts. The scheme is treated
as an equity settled scheme since the exercise is settled in shares.
The fair value of the options granted under this scheme are recognised as an expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the
vesting period in which the employees become entitled to the options. The fair value of the share
options is measured using the Black Scholes pricing model and using the option price determined
prior to the commencement of the scheme. The fair value of the options is reassessed at each
reporting based on the estimated forfeiture rate. Any corresponding change in the fair value would
be recorded as an expense or a credit to the income statement with a corresponding increase or
decrease in equity.
1.13 Own Shares Held by EBT
Transactions of the Company-sponsored EBT are treated as being those of the Company and
are therefore included in the Company and Group financial statements. In particular, the trust’s
transactions in shares in the Company are recorded directly to equity.
1.14 Leases
The Group leases property and certain office equipment. Leases are recognised in accordance
with IFRS16, with those meeting the criteria being capitalised as right-of-use assets and a
corresponding liability recognised, representing the discounted future payments over the duration
of the agreement.
Right-of-Use Assets
The Group recognises right-of-use assets at the inception of the lease (the underlying date the
lease is available for use). Right-of-use assets are measured at cost which equals the amount of
the initial measurement of lease liability, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on
a straight line basis over a term which takes into account the length of the lease term, any break
clauses and a reasonable expectation of the length of time it is intended to occupy the lease. In all
cases, the depreciation period for any given asset aligns to the terms used to calculate the present
value of lease payments.
Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities representing the
discounted future fixed payments over the expected term of the lease (as noted above), measured
at present value. In calculating the present value of lease payments, the Group uses discount rates
based on estimated costs of borrowing to purchase an equivalent asset in each jurisdiction, where
the interest rate is not explicitly stated in the lease agreement. Following the inception of the lease,
the liability is increased to reflect the accretion of interest and reduced for lease payments made.
The Group applies the lease of low-values recognition exemption to leases of certain property and
office equipment that are considered low value (less than £3,850). Lease payments on low value
leases are recognised as an expense on a straight-line basis over the lease term.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.090
Blancco Technology Group plc | Annual Report and Accounts 2022
1. General Information continued
1.15 Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the
Group becomes a party to the contractual provisions of the instrument.
Equity Instruments
Equity instruments issued by the Group are initially recorded at the value of proceeds received, net
of direct issue costs.
Contingent Consideration Payable
Contingent consideration payable is recognised at fair value, subject to discounting for the time
value of money, where material. Changes in fair value are recognised in the income statement.
Non-derivative Financial Instruments
Non-derivative financial instruments include cash and cash equivalents, trade and other
receivables, trade and other payables and borrowings.
•
Cash and cash equivalents comprise cash balances and short-term deposits. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for the purposes of the consolidated
cash flow statement.
•
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition
they are measured at amortised cost.
•
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition
they are measured at amortised cost.
•
Bank borrowings are recognised initially at fair value net of directly attributable transaction
costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between
the proceeds (net of transaction costs) and redemption value is recognised in the income
statement over the period of the borrowings using the effective interest method.
The Group measures the provision for trade and other receivables with reference to expected
lifetime credit losses, and by taking advantage of the simplified model for calculating this which is
available for trade receivables. This requires a loss allowance to be recognised based on lifetime
expected credit losses at each balance sheet date.
Blancco has adopted a ‘provision matrix’ approach which uses historical credit loss experience as
well as factoring in the current market conditions to set a level of provisioning for debts which are
segregated by their key features such as location and ageing.
Derivative Financial Instruments
Derivative financial instruments include contracts the Group has taken out which relate to the
value of another underlying asset. The Group takes out forward contracts to convert foreign
currencies, generally in cases arising where excess foreign currency has been generated and is to
be converted back to sterling, or where there is high certainty on timing of cash flows associated
with a large non-sterling receivable.
Derivatives are accounted in accordance with IFRS9 and are measured at fair value. Changes
in the fair value of derivative financial instruments after initial recognition are recorded in the
income statement.
1.16 Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be
received. Grants that compensate the Group for expenses incurred are recognised in the income
statement in the relevant financial statement caption on a systematic basis in the periods in which
the expenses are recognised. Grants that compensate the Group for activity which otherwise
meets the criteria for capitalisation as development expenditure, are offset against that spend and
the underlying spend is not capitalised or depreciated.
Government grant income that is not received in cash at the year end is recognised as an asset
within trade and other receivables.
1.17 Adjusted Operating Profit/Adjusted Operating Cash Flow
Adjusted operating profit is the key profit measure used by the Board to assess the underlying
financial performance of the Group as a whole. Adjusted operating profit is stated before the
following items for the following reasons:
•
Acquisition costs, because these are irregular in nature.
•
Exceptional income, because this is irregular and is not considered to reflect the underlying
performance of the Group’s operating businesses.
•
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.
Adjusted operating profit includes the release of provisions originally recorded from legacy M&A to
the extent that these relate to operational business matters. To the extent these relate to exceptional
or taxation related matters, they are recorded in the relevant Income Statement caption.
Adjusted EBITDA is adjusted operating profit with depreciation and amortisation added back.
Adjusted operating cash flow is a key internal measure used by the Board to evaluate the cash flow
of the Group. It is defined as operating cash excluding taxation, interest payments and receipts,
acquisition cost payments, share-based payments and exceptional payments.
1.18 Adjusted Earnings Per Share
An adjusted measure of earnings per share has also been presented. Adjusted earnings are
stated before amortisation or impairment of acquired intangible assets, amortisation of bank
fees, exceptional income and costs, acquisition costs, share-based payments, unwinding of the
discounted contingent consideration, adjustments to estimates of contingent consideration and
the tax impacts of the above items.
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
2. Critical Judgements and Estimations in Applying the Group’s
Accounting Policies
2.1 Judgements
In the process of applying the Group’s accounting policies, management makes various
judgements that can significantly affect the amounts recognised in the financial statements.
The critical judgements in the preparation of the financial statements, are considered to be
the following:
•
Revenue recognition requires judgement over what constitutes a separable performance
obligation, which can be complex in customer contracts where a number of services are being
provided to the customer alongside licences. This judgement largely requires consideration
of whether the performance obligations are stand alone, and therefore should be recognised
separately, or inherently linked, and therefore recognised together. There is further judgement
on product delivery (1) over whether a contract is fulfilled at the point the licence is delivered or
whether the Group retains an ongoing obligation to re-deliver licences for product updates or
enhancements; and (2) whether holding a stock of licences in a customer account on a shared
cloud platform demonstrates that sufficient control has passed to the customer in order to
recognise revenue. Management uses specific contractual terms in making this judgement
over how much revenue to recognise.
•
Underlying assumptions used in assessing uncertain tax positions and the assessment of the
recoverability of any related deferred tax assets, based on the likelihood of future profitability
against which to offset each deferred tax asset. Uncertain tax positions are estimated based on
management’s best estimate of the circumstances surrounding them. Judgement is required
with respect to situations in which applicable tax regulation is subject to interpretation and
management considers whether it is probable that a taxation authority will accept an uncertain
tax treatment. Judgement is required in assessing whether certain subsidiaries will generate
taxable profits in the future against which to offset deferred tax assets and uses historic
performance and committed contractual revenues in making this assessment.
•
Judgements in determining whether development expenditure meets the criteria for capitalisation,
specifically on the activities of staff to ascertain whether all criteria to recognise capitalisation are
met, which is done by reviewing the nature of work being undertaken by the development team.
2.2 Estimations
Additionally, management are also required to make judgements over certain balances which
are uncertain and therefore require a degree of estimation as to the amounts included in the
financial statements.
The material areas of estimation uncertainty, while not critical estimates as defined by IAS1, are
considered to be the following:
•
Goodwill and Other Intangible Assets arising from Business Combinations
Allocating value to goodwill and other intangibles arising on business combinations requires
estimation principally around assessing the value of future cash flows for the acquired
intangibles and the discount rate used in assessing the current value of those cash flows.
The assessment carries a high degree of estimation as it is based on future events which are
inherently uncertain.
Determining whether goodwill or other intangible assets are impaired requires an estimation of
the value in use of the cash-generating units and the recoverable amount to which the goodwill
or other intangible assets are allocated. The value in use calculation includes estimates about
future financial performance and long-term growth rates and requires management to select
a suitable discount rate in order to calculate the present value of those cash flows. The key
assumptions used in the impairment review are disclosed in note 14 to the financial statements.
•
Contingent Consideration arising from Business Combinations
Estimating the value of contingent consideration requires estimation as to whether the criteria
for the consideration to be paid out in full have been met, or whether it is likely that some but
not all criteria will be met. The estimation is based on criteria for which the outcome will not be
known until the end of the period over which the contingent consideration is measured, and
therefore a best estimate of the likelihood of achieving the criteria must be made. Any changes
in the future performance of the acquired business is highly likely to affect the amount that will
be paid when it falls due.
•
Tax
The Group may recognise deferred tax assets in respect of unutilised losses and other
temporary differences arising in certain of the Group’s businesses (see note 27). This requires
management to make decisions on the recoverability of such deferred tax assets based on
future forecasts of taxable profits. If these forecast profits do not materialise, or there are
changes in the tax rates or to the period over which the losses or temporary difference might
be recognised, the value of the deferred tax asset will need to be revised in a future period.
•
Useful Economic Life of Intangible Assets
In setting the amortisation rates for the Group’s intangible assets, management have to make
an estimate of the time periods over which value will accrue on that particular asset. This can
particularly fluctuate on capitalised development expenditure based on the timing and level of
product releases. Changes in the actual usage of each asset would impact on the amortisation
charge in each period of account.
•
Fair value of assets and liabilities acquired
Assessment over the fair value of the assets and liabilities acquired as part of a business
combination, including the assessment of unrecorded or contingent liabilities requires
estimations made based on experience of previous acquisitions and from insight gained
through the due diligence procedures undertaken prior to the acquisition completing.
3. Segmental Reporting
As outlined in the Group Financial Review, the Group’s continuing operations consist of one
segment. The segment consists of several key markets, comprising Enterprise, Mobile and ITAD,
however these are not considered separate segments in accordance with IFRS 8, Operating
Segments, since they do not form part of management information provided to key decision
makers and are measured only at revenue level.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.092
Blancco Technology Group plc | Annual Report and Accounts 2022
3. Segmental Reporting continued
Discontinued Operations
The post-tax results from discontinued operations in the year was £nil (2021: £0.3 million profit).
The profit in the prior year arose from the final release of provisions that were created upon the
disposal of the Repair Services business in the year ended 30 June 2016.
Geographical Information
The following geographical information is based on the location of the business units of the Group:
Continuing operations
Revenue from external customers
2022
£’000
2021
£’000
UK
4,609
3,396
USA
11,759
10,261
Asia Pacific
11,648
11,895
Europe
11,036
10,009
Rest of World
747
945
39,799
36,506
No customer represented more than 10% of the Group’s revenue (2021: none).
The Group derived revenue from the transfer of goods and services over time and at a point in time
on the following basis:
Revenue
2022
£’000
2021
£’000
Timing of revenue recognition:
At a point in time
39,398
36,158
Over time
401
348
39,799
36,506
The Group generated revenue from the supply of goods and the rendering of services on the
following basis:
Revenue
2022
£’000
2021
£’000
Supply of licenses and related services
39,110
35,535
Supply of goods
689
971
39,799
36,506
Unsatisfied long-term contracts
As at 30 June 2022, the Group had contracted but unsatisfied performance obligations amounting
to £12.6 million (2021: £12.3 million) of which £7.3 million (2021: £8.8 million) is expected to be
recognised as revenue in the next reporting period.
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
2022
£’000
2021
£’000
Current contract assets relating to performance obligations satisfied
240
184
Contract liabilities
1,507
863
Contract assets arise predominantly where the Group expects to deliver no further product but
the customer has not yet been fully billed. No loss allowance is recognised as the Group expects
to collect all revenue on these contracts in full, based on the observed loss allowance historically
for similar customers.
Contract liabilities have increased predominantly due to one long-term contract signed in the
year for which the delivery obligation is spread over the three-year contract period and invoiced
up-front.
Of the total contract liability of £0.9 million (2021: £1.4 million) at the beginning of the period,
£0.8 million has been recognised (2021: £1.0 million) in the year.
In the current year, there is no (2021: no) revenue recognised from performance obligations
satisfied in prior periods.
Non-current assets
2022
£’000
2021
£’000
UK
108
174
Non-UK
78,937
69,762
79,045
69,936
4. Auditors’ Remuneration
2022
£’000
2021
£’000
Fees payable to the Company’s auditor and its associates for the
audit of the Company and Consolidated financial statements
146
122
The audit of the Company’s subsidiaries pursuant to legislation
161
153
Total audit fees
307
275
There have been no non-audit fees in the current or prior year as PricewaterhouseCoopers LLP
has not been engaged to provide any non-audit services.
The Board considers the level of fees paid to the auditor and in particular the level of non-audit
fees on a regular basis and has concluded appropriate safeguards were in place to ensure the
independence of the auditor.
Financial Statements
.093
Blancco Technology Group plc | Annual Report and Accounts 2022
5. Exceptional and acquisition costs/(income)
2022
£’000
2021
£’000
Provision releases
–
(478)
COVID-19 support income
–
(359)
Acquisition and deal costs
542
–
Total audit fees
542
(837)
Acquisition costs relate to the acquisition of WipeDrive Inc that was completed on 7 June 2022.
Exceptional income in the prior year arose from the release of provisions recognised on historical
acquisitions that the business deemed to no longer to be required. These covered items that
were exceptional in nature and did not relate to the underlying operating expenses of the acquired
business and accordingly the releases were recorded through exceptional income.
Furthermore, in the prior year, a gain of £0.4 million arose from the forgiveness of US Payment
Protection Program loans granted at the start of the COVID-19 pandemic.
6. Profit for the Year
Profit for the year for the Group has been arrived at after charging/(crediting):
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£’000
Depreciation of property, plant and equipment – owned
250
247
Depreciation of property, plant and equipment – right of use asset
869
882
Loss on disposal of intangible assets
–
66
Profit on disposal of property, plant and equipment
–
(6)
Amortisation of intangible assets
6,606
6,612
Expense relating to leases of low-value assets
27
25
Cost of inventories recognised as an expense
429
377
Research & development expense
1,191
1,131
Staff costs recognised as an expense, excluding
share-based payments
19,777
17,507
Net foreign exchange loss/(gain)
220
(316)
7. Discontinued Operations
The post-tax result from discontinued operations in the year is £nil (2021: £0.3 million profit). The
profit in the prior year arose from the final release of provisions that were created upon the disposal
of the Repair Services business in the year ended 30 June 2016.
There were no cash flows from operating, investing or financing activities in either the current or
previous year.
8. Staff Costs
2022
Average
number
2021
Average
number
Sales and business development
162
148
Administration
49
49
Research and development
118
119
329
316
Aggregate employment costs
2022
Total
£’000
2021
Total
£’000
Wages and salaries
21,042
19,140
Social security costs
1,513
1,283
Share-based payments
1,387
1,490
Other pension costs
1,343
1,177
25,285
23,090
Of total staff costs of £25.3 million (2021: £23.1 million), £4.1 million were capitalised within other
intangible assets (2021: £4.1 million).
Key management personnel have been identified as the 11 employees (2021: 11) comprising the
main Board and Executive leadership team.
Remuneration of key management personnel is as follows:
Key management personnel costs
2022
£’000
2021
£’000
Short term employee benefits
2,699
2,528
Share-based payments
560
772
3,259
3,300
Aggregate employment costs of Group Directors are as follows:
2022
£’000
2021
£’000
Aggregate emoluments
1,473
1,418
Aggregate gains made on exercise of share options
1,775
512
Aggregate amounts receivable under long term incentive schemes*
579
1,899
Company contributions to a pension scheme
13
12
3,840
3,841
* with respect to options vesting on performance conditions in respect of the specific years presented.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.094
Blancco Technology Group plc | Annual Report and Accounts 2022
8. Staff Costs continued
Aggregate remuneration disclosed here with respect to the Group’s share option plans are stated at
their market value, which differs to the charge through the income statement which is expensed in
accordance with IFRS2. Further details on the share based payment expense is disclosed in note 29.
Further details of the Directors’ remuneration including those of the highest paid director are
provided in the audited section of the Remuneration Committee report on page 71.
The aggregate gain made on exercise of share options in the year for the highest paid director
is £1,019,000 (2021: £512,000). The aggregate amount receivable under long term incentive
schemes with respect to options vesting in respect of this year for the highest paid director is
£431,000 (2021: £1,090,000, with respect to options vesting in respect of the prior year).
9. Finance Costs
Continuing operations
2022
£’000
2021
£’000
Bank interest receivable and similar income
6
121
Interest payable on bank loans and overdrafts
(58)
(18)
Other bank charges
(33)
(245)
Revaluation of contingent consideration
–
(62)
Interest on lease liabilities
(110)
(95)
Net finance cost
(195)
(299)
10. Taxation
Continuing operations
2022
£’000
2021
£’000
Current tax
UK corporation tax
–
–
Overseas tax
341
252
Adjustments in respect of prior years
(158)
(186)
Total current tax charge
183
66
Deferred tax
UK
–
192
Overseas
(380)
(138)
Adjustments in respect of prior years
(167)
(25)
Total deferred tax (credit)/charge (note 27)
(547)
29
Tax (credit)/charge
(364)
95
UK Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit
for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The Group’s total income tax (credit)/charge for the year can be reconciled to the profit before
tax per the consolidated income statement as follows:
2022
£’000
2021
£’000
Profit before tax
1,687
1,475
Tax at standard UK corporation tax rate of 19% (2021: 19%)
321
280
Effects of:
Permanent differences
(74)
(28)
Rate differences
82
113
Adjustment in respect of prior years
(326)
(211)
Revaluation of deferred tax balances
(135)
(14)
Movement on unrecognised deferred tax assets
(42)
100
R&D tax credit
(190)
(145)
Tax (credit)/charge
(364)
95
Factors that may affect future current and total tax charges
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2021
(on 24 May 2021). Deferred taxes at the balance sheet date have been measured using the
enacted tax rates and reflected in these financial statements.
Deferred tax charge on share based payments
A deferred tax asset is recognised on the difference between the accounting and tax value of
unvested share options. The timing difference arises due to the IFRS2 charge being expensed over
the duration of the vesting period, however the tax deduction is only allowable at the point of exercise.
Where an additional tax difference arises due to the difference between the accounting value
(represented by the IFRS2 charge) and the tax value of the outstanding awards (represented by
market value), the corresponding credit is taken directly to equity. In the year, a total charge of
£0.6 million was recognised directly in retained earnings (2021: credit of £0.6 million).
The deferred tax asset is offset against deferred tax liabilities in accordance with IAS 12, and
therefore is included within this financial statement caption, due to the tax impacts occurring in
the same jurisdiction.
Financial Statements
.095
Blancco Technology Group plc | Annual Report and Accounts 2022
11. Earnings Per Share (EPS)
Year ended
30 June
2022
Pence
Year ended
30 June
2021
Pence
Continuing operations
Basic earnings per share
2.71 p
1.84 p
Diluted earnings per share
2.64 p
1.78 p
Adjusted earnings per share
7.81 p
5.77 p
Diluted adjusted earnings per share
7.62 p
5.58 p
Discontinued operations
Basic earnings per share
0.00 p
0.45 p
Diluted earnings per share
0.00 p
0.43 p
Adjusted earnings per share
0.00 p
0.45 p
Diluted adjusted earnings per share
0.00 p
0.43 p
Total Group
Basic earnings per share
2.71 p
2.29 p
Diluted earnings per share
2.64 p
2.21 p
Adjusted earnings per share
7.81 p
6.22 p
Diluted adjusted earnings per share
7.62 p
6.01 p
Continuing operations
Year ended
30 June
2022
£’000
Year ended
30 June
2021
£’000
Profit for the year
2,051
1,380
Profit attributable to non-controlling interests
(27)
(14)
Profit attributable to equity holders of the parent company
2,024
1,366
Reconciliation to adjusted profit:
Revaluation of contingent consideration
–
62
Acquisition costs
542
–
Amortisation of acquired intangible assets
2,683
2,859
Exceptional income
–
(837)
Amortisation of bank fees
8
3
Share-based payments charge
1,387
1,490
Tax impact of above adjustments
(800)
(667)
Adjusted profit for the year
5,844
4,276
The weighted average number of shares and reconciliation between basic and diluted measures is
presented below:
Number of shares
Year ended
30 June
2022
‘000s
Year ended
30 June
2021
‘000s
Weighted average number of shares (excluding bonus
element and treasury shares)
74,776
73,964
Bonus element from share placing in July 2019
–
140
Basic
74,776
74,104
Impact of dilutive share options
1,877
2,573
Diluted
76,653
76,677
The bonus element increasing the basic number of shares used in the prior year earnings per
share calculation arose from the placing of 8,000,000 shares in July 2019 and represents the
number of shares effectively issued without consideration, due to the issue price of 125 pence
being at a discount on the market price of 127.5 pence prior to the placing.
The dilutive share options are in respect of the shares awarded under the Blancco Performance
Share Plan and Sharesave plan and further details of the schemes are in note 29.
12. Cash Flows Associated with Acquisitions and Disposals
Within the consolidated cash flow statement, the £6.9 million outflow relates to the acquisition of
WipeDrive Inc., net of cash acquired of £0.2 million. In the prior year, the £0.3 million cash outflow
relates to the final payment of contingent consideration on the Xcaliber acquisition.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.096
Blancco Technology Group plc | Annual Report and Accounts 2022
13. Acquisitions
Acquisition of WipeDrive Inc.
On 7 June 2022 the Group completed the acquisition of 100% of the issued share capital of
WipeDrive Inc for headline consideration of $10 million of which $8.5 million was satisfied in cash
and further contingent consideration of up to $1.5 million to be paid in cash 12 months following
completion subject to certain performance criteria. The consideration was also subject to a
working capital adjustment which resulted in a further $0.1 million paid in August 2022.
In the year ended 30 June 2022, the acquisition has contributed revenue of £0.5 million and
adjusted operating profit of £0.4 million. Had the acquisition completed on the first day of the
financial year, it is estimated it would have contributed revenue of £2.7 million and adjusted
operating profit of £1.1 million.
The provisional book value and fair value of the assets acquired, and liabilities assumed,
were as follows:
Book value
£’000
Fair value
adjustments and
IFRS alignment
£’000
Fair value
£’000
Intangible assets arising on consolidation
584
2,055
2,639
Property, plant and equipment
31
458
489
Deferred tax
–
(1,080)
(1,080)
Cash and cash equivalents
167
(1)
166
Inventory
31
(14)
17
Trade and other receivables
363
(8)
355
Trade and other payables
(94)
(566)
(660)
Contract liabilities
(1,516)
1,516
–
Net assets acquired
(434)
2,360
1,926
Goodwill
6,460
Total consideration
8,386
Satisfied by:
Cash
7,039
Contingent consideration
1,347
Total consideration
8,386
The Directors identified a number of adjustments that were required to the book values, following
a review of all balance sheet categories. These adjustments include the recognition of previously
deferred revenue in accordance with IFRS 15 (£1,516,000), and the recognition of the associated
deferred tax thereon. There were also employee related accruals totalling £93,000.
Under IFRS3 Business Combinations, separately identifiable intangible assets arising from the
acquisition have been capitalised. These relate to technology of £1,964,000, customer contracts
of £459,000 and marketing brand of £216,000. A deferred tax liability of £686,000 was recognised
against these assets.
A right-of-use asset and associated liability of £458,000 was recognised with respect to a property
lease held.
The goodwill of £6,460,000 was attributed to the anticipated growth of the combined Group,
strategic benefits, synergies and workforces in place.
Contingent consideration
The acquisition includes deferred consideration to be paid in two instalments, relating to a working
capital adjustment settled in August 2022 and a contingent payment up to $1.5 million which is
due to be settled in June 2023. The estimated total cash outflow is $1.6 million (£1.3 million), for
which a current liability has been established on the balance sheet as at 30 June 2022.
14. Goodwill
Total
£‘000
Cost
At 1 July 2020
51,881
Foreign exchange movement
(3,682)
At 30 June 2021
48,199
Acquisition
6,460
Foreign exchange movement
1,381
At 30 June 2022
56,040
Accumulated impairment losses
At 1 July 2020, 30 June 2021 and 30 June 2022
–
Net book value
At 30 June 2022
56,040
At 30 June 2021
48,199
At 30 June 2020
51,881
Management has used the Board approved budget for the year ending 30 June 2023 as the basis
on which future cash flow projections are calculated.
Financial Statements
.097
Blancco Technology Group plc | Annual Report and Accounts 2022
14. Goodwill continued
A future cash flow projection is modelled out for ten years using assumptions of annual growth
rates, increases in the cost of direct and indirect costs. Additionally, the modelling takes into
account the movement in working capital required to sustain the growth, and the continued annual
investment in R&D in order to maintain the products to support the projected revenues.
The projections in excess of the budget period extend to ten years which is in excess of the
standard projection period of five years. The Directors continue to consider the extended period
appropriate for the following reasons:
•
The Group has historically observed growth rates in excess of the post-war real annual average
growth rate, and over a sustained period in excess of five years.
•
The technology sector is generally growing at a higher rate that than the average for the
countries in which we operate, with the level of data creation far in excess of long term average
growth rates.
•
Data security continues to become a much more regulated sector which is leading to higher
levels of market education around the benefits of data erasure, which is continuing to expand
our market reach.
The assumptions used in the ten year projection period remain the same as the prior period and
include annual compound growth in revenue and sales and marketing costs of 7.5%. This level of
growth is lower than the compound average growth rate observed within the Group, the organic
growth rate in the previous financial year, and the growth rate used in the approved budget. This
is therefore considered to be a prudent forecast of medium term growth potential due to market
drivers. The growth in the fixed cost base in the model remains at 2%, in line with the Bank of
England and Federal Reserve long term inflation targets.
This equates to a compound annual growth in Adjusted EBITDA over this period of 10.7%, with
this metric being the key driver behind cash generation. The Directors consider the increase in
operating margin to be appropriate given the low cost of sales of the product, resulting in the
overall cost base growing at a slower rate than revenues.
A terminal growth value of 2% has been used in year 10, which is benchmarked upon the post-war
real annual average growth in GDP in the markets the Group serves.
The pre-tax discount rate applied is 10.9%. In the prior year, the pre-tax discount rate applied was
9.8%. The discount rate has increased due to the increase in the risk free rate of return applied in
the weighted average cost of capital calculations.
Management has undertaken sensitivity analysis on several of the key assumptions in the value-
in-use calculations. However, the results of the sensitivity analysis conclude that there would have
to be a significant change in key assumptions to occur before impairment would be triggered.
For example, the compound annual revenue and EBITDA growth rate would have to decline to
0.9% before any impairment was triggered which is considered unrepresentative of long term
future growth prospects, and would represent a 88% reduction on the current assumption.
Analysis completed on the fixed cost base and discount factor conclude that a similarly significant
adjustment to those single inputs would be required to trigger impairment.
Management have therefore concluded that there is a more than adequate amount of headroom
in the calculations and that there is no single reasonably possible change in the key assumptions
that would trigger impairment. Management also considered the recoverable amount of the Group
as demonstrated by the market capitalisation of the Group which is significantly in excess of the
carrying value of net assets. It is therefore reasonable to value the goodwill at its purchased value
and that no impairment is necessary at 30 June 2022.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.098
Blancco Technology Group plc | Annual Report and Accounts 2022
15. Other Intangible Assets
Brand name
£’000
Intellectual
property
£’000
Customer contracts
£’000
Development
expenditure
£’000
Assets under
construction
£’000
Other
intangible assets
£’000
Total
£’000
Cost
At 1 July 2020
3,717
17,229
9,447
16,706
405
2,853
50,357
Additions
–
–
–
4,211
–
461
4,672
Disposals
–
–
–
–
–
(331)
(331)
Reclassifications
–
–
–
405
(405)
–
–
Exchange movement
(248)
(1,173)
(613)
(1,182)
–
(502)
(3,718)
At 30 June 2021
3,469
16,056
8,834
20,140
–
2,481
50,980
Acquisition
216
1,964
459
–
–
–
2,639
Additions
–
–
–
4,134
–
319
4,453
Disposals
–
–
–
–
–
(283)
(283)
Exchange movement
59
331
111
65
–
378
944
At 30 June 2022
3,744
18,351
9,404
24,339
–
2,895
58,733
Accumulated amortisation
At 1 July 2020
1,905
9,726
5,512
8,785
–
1,631
27,559
Charge for the year
241
1,719
899
3,324
–
429
6,612
Disposals
–
–
–
–
–
(265)
(265)
Exchange movement
(145)
(710)
(375)
(625)
–
(440)
(2,295)
At 30 June 2021
2,001
10,735
6,036
11,484
–
1,355
31,611
Charge for the year
240
1,675
768
3,540
–
383
6,606
Disposals
–
–
–
–
–
(283)
(283)
Exchange movement
62
251
120
55
–
383
871
At 30 June 2022
2,303
12,661
6,924
15,079
–
1,838
38,805
Net book value at 30 June 2022
1,441
5,690
2,480
9,260
–
1,057
19,928
Net book value at 30 June 2021
1,468
5,321
2,798
8,656
–
1,126
19,369
Net book value at 30 June 2020
1,812
7,503
3,935
7,921
405
1,222
22,798
The Group’s capitalised internal development expenditure of £4.1 million (2021: £4.1 million), relates predominantly in the continued development of Blancco software. Amortisation of internally generated
development expenditure for the Group is £3.2 million (2021: £3.0 million).
The amortisation is presented in the Income Statement within administrative expenses, with the amortisation associated with acquired intangibles included as a reconciling item within adjusted
administrative expenses and therefore not recorded in adjusted operating profit.
Financial Statements
.099
Blancco Technology Group plc | Annual Report and Accounts 2022
16. Property, Plant and Equipment
Leasehold
improvements
£’000
Computer
equipment
£’000
Fixtures and
fittings
£’000
Right of use
assets
£’000
Total
£‘000
Cost
At 1 July 2020
80
918
503
3,626
5,127
Additions
–
197
38
1,723
1,958
Disposals
(27)
(36)
(19)
(1,486)
(1,568)
Exchange Movement
(5)
(100)
(50)
(217)
(372)
At 30 June 2021
48
979
472
3,646
5,145
Acquisition
40
–
13
458
511
Additions
–
148
9
1,073
1,230
Disposals
(3)
(71)
(49)
(31)
(154)
Exchange movement
–
17
8
130
155
At 30 June 2022
85
1,073
453
5,276
6,887
Accumulated depreciation
At 1 July 2020
56
576
329
2,401
3,362
Charge for the year
10
158
79
882
1,129
Disposals
(27)
(36)
(19)
(1,341)
(1,423)
Exchange movement
(4)
(81)
(27)
(60)
(172)
At 30 June 2021
35
617
362
1,882
2,896
Acquisition
9
–
13
–
22
Charge for the year
4
194
52
869
1,119
Disposals
(3)
(71)
(49)
(31)
(154)
Exchange movement
–
12
7
15
34
At 30 June 2022
45
752
385
2,735
3,917
Net book value at
30 June 2022
40
321
68
2,541
2,970
Net book value at
30 June 2021
13
362
110
1,764
2,249
Net book value at
30 June 2020
24
342
174
1,225
1,765
17. Leases
The balance sheet includes the following amounts relating to leases:
2022
£’000
2021
£’000
Right of use assets
Buildings
2,511
1,709
Vehicles
30
55
2,541
1,764
2022
£’000
2021
£’000
Lease liabilities
Current
1,053
678
Non-current
1,575
1,092
2,628
1,770
Additions to the right-of-use assets during the year were £1.5 million (2021: £1.7 million) including
a lease assumed on the acquisition of WipeDrive Inc of £0.5 million (2021: £nil), and principally
comprise new building leases.
The income statement includes the following amounts relating to leases:
2022
£’000
2021
£’000
Depreciation charge of right-of-use assets
Buildings
839
852
Vehicles
30
30
869
882
Interest charge on lease liabilities
110
95
Expense relating to lease of low value assets
27
25
The total cash outflow for leases in the year was £0.9 million (2021: £1.0 million) which includes the
cash outflow from low value leases of £27,000 (2021: £25,000).
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.100
Blancco Technology Group plc | Annual Report and Accounts 2022
18. Investments
The Group’s subsidiary undertakings are as follows:
Company name
Principal activity
of the Company
Ownership
percentage
by the Group
Country of
incorporation
Company Address
Held directly by the Company
Blancco Central Services Ltd
Intermediate
services company
100%
England
and Wales
Suite 1, Chapel House, Thremhall Park, Start Hill, Bishops Stortford, Hertfordshire, United Kingdom, CM22 7WE
Blancco (Software) Services Ltd
Intermediate
holding company
100%
England
and Wales
Suite 1, Chapel House, Thremhall Park, Start Hill, Bishops Stortford, Hertfordshire, United Kingdom, CM22 7WE
Blancco Trustees Ltd
Trustee for the
Blancco Employee
Benefit Trust
100%
England
and Wales
Suite 1, Chapel House, Thremhall Park, Start Hill, Bishops Stortford, Hertfordshire, United Kingdom, CM22 7WE
Held indirectly by the Company
Blancco APAC Pte. Limited
Data erasure
100%
Singapore
1 Paya Lebar Link, #04-01, Paya Lebar Quarter, Singapore 408533
Blancco Finland Acquisitions Oy
Intermediate holding
company
100%
Finland
Upseerinkatu 1-3, FIN-02600 Espoo, Lansikatu 15
Blancco Technology Group IP Oy
Data erasure
100%
Finland
Upseerinkatu 1-3, FIN-02600 Espoo, Lansikatu 15
Blancco Diagnostics (India) Pvt Ltd**
Smartphone
diagnostics
100%
India
Sai Radhe Complex, B Wing, Ofc No.109, Urbanwrk Floor5 Sangamwadi, Kennedy Rd, Bhd Hotel Sheraton Grand,
Pune MH 411001
Blancco (Software) India Private Limited**
Data erasure
100%
India
Sai Radhe Complex, B Wing, Ofc No.109, Urbanwrk Floor5 Sangamwadi, Kennedy Rd, Bhd Hotel Sheraton Grand,
Pune MH 411001
Blancco (Software) Netherlands BV
Data erasure
100%
Netherlands
Schiphol Boulevard 127, 1118 BG Schiphol
Blancco Technology (Beijing) Co., Ltd*
Data erasure
100%
China
17/F, Tower D1, DRC Diplomatic Office Building, No. 19 Dongfangdong Road, Chaoyang District, Beijing, 100016
China
Blancco Software Services Inc.
Intermediate
holding company
100%
United States
of America
555 Northpoint Center East, Suite 400, Alpharetta, GA, 30022
Blancco Services US LLC
Intermediate
services company
100%
United States
of America
555 Northpoint Center East, Suite 400, Alpharetta, GA, 30022
Blancco Oy Ltd
Data erasure
100%
Finland
Upseerinkatu 1-3, FIN-0200 Espoo, Lansikatu 15
Blancco UK Ltd
Data erasure
100%
England
and Wales
Suite 1, Chapel House, Thremhall Park, Start Hill, Bishops Stortford, Hertfordshire, United Kingdom, CM22 7WE
Blancco France SAS
Data erasure
100%
France
2, Allée de la Marque, Centre d’Affaires du Molinel, Bât E – 2ème étage, 59290 Wasquehal, France
Blancco US LLC
Data erasure
100%
United States
of America
555 Northpoint Center East, Suite 400, Alpharetta, GA, 30022
Blancco Central Europe GmbH
Data erasure
100%
Germany
Monreposstrasse 53, D-71634 Ludwigsburg
Blancco Canada Inc.
Data erasure
100%
Canada
Unit 1B, 33820 South Fraser Way, Abbotsford, B.C. V2S2C5
Blancco SEA Sdn Bhd
Data erasure
100%
Malaysia
Unit 32-01, Level 32, The Vertical Corporate Office Tower B, Avenue 10, Bangsar South,
No 8, Jalan Kerinchi, 59200 Kuala Lumpur
Blancco Australasia Pty Ltd
Data erasure
100%
Australia
Level 19, 10 Eagle Street, Brisbane, QLD 4000
Blancco Japan Inc.
Data erasure
80%
Japan
Gaien Building SF, 2-23-8 Minami-Aoyama, Minato-Ku, Tokyo, 107-002
Financial Statements
.101
Blancco Technology Group plc | Annual Report and Accounts 2022
Company name
Principal activity
of the Company
Ownership
percentage
by the Group
Country of
incorporation
Company Address
Blancco Sweden SFO
Data erasure
100%
Sweden
Franzengatan 53, 112 15 Stockholm
Blancco Technology Group Ireland Limited
Smartphone
diagnostics
100%
Ireland
Evergreen House, Congress Road, Cork, T12 X792
WipeDrive Inc*
Data erasure
100%
United States
of America
1064 S. North County Blvd, Suite 330, Pleasant Grove, UT 84062
Yougetitback Inc*
Smartphone
diagnostics
100%
United States
of America
One Broadway, 14th Floor Kendall Square, Cambridge, MA, 02142
*Year end date is 31 December, but consolidated to 30 June
**Year end date is 31 March, but consolidated to 30 June
The proportion of voting rights represented by the shareholdings is consistent with the
percentages disclosed in the table above.
Investments in Part-owned Subsidiaries
Summarised financial information relating to the Group’s subsidiary with a non-controlling interest
(NCI) that is material to the Group, before any intra-group eliminations, is shown below:
2022
£’000
2021
£’000
Shareholdings
80%
80%
Current assets
2,277
2,131
Non-current assets
2,450
2,642
Current liabilities
(1,950)
(1,957)
Non-current liabilities
–
–
Net assets
2,777
2,816
Net assets attributable to NCI
555
563
Revenue
7,448
7,925
Profit after taxation
136
70
Profit after taxation attributable to NCI
27
14
Cash flows from operating activities
633
281
Cash flows from investing activities
(18)
(24)
Cash flows from financing activities
(94)
(113)
Net increase in cash and cash equivalents
521
144
Other non-cash movements – exchange rate changes
(240)
(75)
18. Investments continued
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.102
Blancco Technology Group plc | Annual Report and Accounts 2022
19. Inventory
2022
£’000
2021
£’000
Finished goods
216
110
There is no provision for obsolete stock (2021: £nil)
20. Trade and Other receivables
2022
£’000
2021
£’000
Trade receivables
7,493
4,953
Less: loss allowance
(93)
(209)
Trade receivables net of provision
7,400
4,744
Prepayments, contract assets and other receivables
1,554
1,460
8,954
6,204
A reconciliation of the movement in the loss allowances for trade receivables is as follows:
2022
£’000
2021
£’000
At 1 July
209
198
(Decrease)/increase in loss allowance recognised in the income
statement during the year
(82)
65
Write-offs
(34)
(54)
At 30 June
93
209
21. Cash and Cash Equivalents
2022
£’000
2021
£’000
Cash at bank and in hand
8,195
10,071
22. Trade and Other Payables
Included within the trade and other payables current liability are:
2022
£’000
2021
£’000
Trade payables
766
498
Other taxes and social security
1,869
1,554
Lease liabilities
1,053
678
Other payables
194
134
Accruals
4,734
4,079
Contract liabilities
817
824
9,433
7,767
Included within the other payables non-current liability are:
2022
£’000
2021
£’000
Lease liabilities
1,575
1,092
Contract liabilities
690
39
2,265
1,131
23. Borrowings
2022
£’000
2021
£’000
Due after more than one year:
Secured bank loan
2,000
–
Repayable:
In the first to second years inclusive
2,000
–
In the third to fifth years inclusive
–
–
The bank borrowing is secured on the majority of the Group’s assets for the duration of
the revolving credit facility which expires in January 2024. The total cash facility available
to the Company, including an overdraft facility, as at 30 June 2022 totalled £7.0 million
(2021: £7.0 million), of which £3.4 million (2021: £nil) had been drawn down in cash at the
balance sheet date, resulting in an unutilised facility of £3.6 million (2021: £7.0 million).
The overdraft facility is presented within cash and cash equivalents.
Under the revolving credit facility, the Group is subject to certain financial covenants relating to:
•
Leverage – the ratio of total net debt to EBITDA.
•
Interest cover – the ratio of EBITDA to total debt costs.
The Group has complied with these financial covenants in the year and future forecasts indicate
these will be met for the remaining duration of the facility.
Financial Statements
.103
Blancco Technology Group plc | Annual Report and Accounts 2022
24. Net Funds
2022
£’000
2021
£’000
Cash and cash equivalents
8,195
10,071
Borrowings
(2,000)
–
6,195
10,071
25. Reconciliation of Movement in Cash and Financing Liabilities
At
1 July
2020
£’000
Cash flow
£’000
Other
non-cash
items
£’000
At
30 June
2021
£’000
Cash at bank and in hand
6,719
3,955
(603)
10,071
Net Funds
6,719
3,955
(603)
10,071
Lease liabilities
1,283
(1,022)
1,509
1,770
At
1 July
2021
£’000
Cash flow
£’000
Other
non-cash
items
£’000
At
30 June
2022
£’000
Cash at bank and in hand
10,071
(1,864)
(12)
8,195
Borrowings
–
(2,000)
–
(2,000)
Net Funds
10,071
(3,864)
(12)
6,195
Lease liabilities
1,770
(901)
1,759
2,628
Other non-cash items within lease liabilities includes additions to leases of £1.5 million
(2021: £1.7 million) including a lease assumed on the acquisition of WipeDrive Inc of
£0.5 million (2021: £nil) and disposals of £nil (2021: £0.1 million).
26. Financial Instruments – Risk Management
Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as
going concerns while maximising return for stakeholders through the optimisation of the debt
and equity balance.
The Group’s capital structure is as follows:
2022
£’000
2021
£’000
Borrowings (Revolving Credit Facility)
(2,000)
–
Cash and cash equivalents
8,195
10,071
Net funds
6,195
10,071
Equity holders of the Company
77,188
74,338
Gearing ratio (debt to equity)
0.026
n/a
Categories of Financial Instruments
The following assets and liabilities at carrying values meet the definition of financial instruments
and are classified according to the following categories.
2022
£’000
2021
£’000
Assets carried at amortised cost
Trade and other receivables
8,008
5,352
Cash
8,195
10,071
Financial assets
16,203
15,423
2022
£’000
2021
£’000
Liabilities carried at amortised cost
Trade and other payables
5,689
4,700
Lease liabilities
2,628
1,770
Borrowings
2,000
–
Liabilities carried at fair value through profit and loss
Contingent consideration
1,347
–
Financial liabilities
11,664
6,470
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.104
Blancco Technology Group plc | Annual Report and Accounts 2022
26. Financial Instruments – Risk Management continued
Estimation of Fair Values
The Group analyses financial instruments into a fair value hierarchy based on the valuation
technique used to determine fair value.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. There are no
level 1 financial assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). There are no level 2
financial assets or liabilities.
Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The only Level 3 instrument is the contingent consideration liability and it is carried at fair value
derived using a Level 3 valuation method. The movement in the fair value is shown below:
Total
£‘000
At 1 July 2020 and 30 June 2021
–
Created upon acquisition
1,347
At 30 June 2022
1,347
The contingent consideration is created upon the acquisition of WipeDrive Inc and the following
table summarises the quantitative information about the significant unobservable inputs used in
the fair value measurement:
Description
2022
2021
Relationship of unobservable
inputs to fair value
Contingent consideration (£’000)
1,347
–
Unobservable input
Expected revenues ($’000)
2,500
n/a
If expected revenues were 5%
below target, the fair value would
decrease by $317,000 (£262,000)
Based on revenue forecasts and achievement in the post acquisition period, the achievement
of the earn out criteria has been assessed as being highly likely to be met in full, and accrued at
maximum value accordingly.
For the other financial assets and financial liabilities, the carrying value and fair value is considered
to be materially the same with the following assumptions:
•
For trade and other receivables/payables with a remaining life of less than one year, the carrying
amount is deemed to reflect the fair value.
•
For cash and cash equivalents, the amount reported on the balance sheet approximates to
fair value.
•
For borrowings at floating rates, the carrying value is deemed to reflect the fair value as it is
considered to represent the price of the instrument in the marketplace.
Financial Risk Management
The main risks arising from the Group’s financial instruments are market risk (including foreign
currency risk and interest rate risk), liquidity risk and credit risk. The Group seeks to minimise
the effects of these risks by developing and consistently applying Board approved policies and
procedures. Such policies and procedures are regularly reviewed for their appropriateness and
effectiveness to deal with the changing nature of financial risks.
Market Risk - Interest Rate Risk
During the year, the revolving credit facility attracted a margin of 1.75% (2021: 1.75%) above
SONIA (for GBP amounts drawn down). The undrawn part of the Revolving Credit Facility is
subject to a charge during its availability, computed at 35% (2021: 35%) of margin.
A change in the SONIA rate of 2% would increase or decrease the annual interest charge on the
revolving credit facility drawn down as at 30 June 2022 of £2.0 million (2021: £nil) by £40,000
(2021: £nil).
Foreign Currency Risk
One of the risks that the Group faces in doing business in overseas markets is currency
fluctuations. The Group’s hedging policy is the responsibility of the Board. The CFO periodically
reviews the Group’s hedging activities and will formally recommend any changes to the Board
as necessary.
•
Where we have accumulated a significant value of non-sterling cash through trading, we will
periodically convert this back to sterling at spot rates, or forward rates if the Group can obtain
a more attractive conversion rate.
•
We may undertake a limited number of forward contracts for certain 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.
•
We may undertake natural hedging between the cash and borrowings of different currencies,
through the Group’s multi-currency pooled overdraft.
•
We may undertake natural hedging by structuring and paying future earn-outs on acquisitions
and significant investments in the target Company’s local currency.
•
We do not undertake any other hedging activities 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. We do not undertake any cash
flow or profit hedging activities to insulate from currency movements in respect of overseas
earnings, as we cannot assess these earnings with any high degree of accuracy in terms of
timings and amounts.
The Group has a good mix of business across ten main currencies and this does provide some
degree of smoothing of currency movements in any one country through a portfolio effect.
Financial Statements
.105
Blancco Technology Group plc | Annual Report and Accounts 2022
26. Financial Instruments – Risk Management continued
The table below shows the extent to which the Group had significant monetary assets and
liabilities denominated in currencies other than the local currency of the Company in which they
are recorded, for those currencies which represent over 10% of revenues.
JPY denominated
EUR denominated
USD denominated
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Monetary assets
430
806
3,037
2,817
1,853
1,194
Monetary liabilities
–
–
(4,542)
(4,829)
(3,378)
(2,643)
Net monetary assets/(liabilities)
430
806
(1,505)
(2,012)
(1,525)
(1,449)
There are no forward contracts in place as at 30 June 2022 (2021: one). The quantum of the
forward contract in the prior year was £0.3 million and hedged against part of the Group’s euro
cash holding at that date. The fair value of the forward contract in the prior year was immaterial.
The large euro and US dollar monetary liabilities represent the overdraft balance held in foreign
currencies by the parent company, which are held to hedge against cash balances denominated in
those currencies which are held in overseas subsidiaries. The overseas holdings do not generate
foreign currency volatility through the income statement, and hence are not represented in the above
monetary assets, since they generally report their results in the currencies of those cash balances.
Sensitivity Analysis
This quantifies the impact of change in value of assets and liabilities denominated in a currency other
than the functional currency of that business unit. A 15% appreciation/depreciation of the Japanese
yen, the euro and the US dollar against sterling, applied to the net monetary assets/liabilities as at
30 June, would give rise to the following gain/(loss) in the retranslation of these balances:
JPY denominated
EUR denominated
USD denominated
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Profit/(loss) before tax – gain/(loss)
15% appreciation of JPY/EUR/USD
65
121
(226)
(302)
(229)
(217)
15% depreciation of JPY/EUR/ USD
(65)
(121)
226
302
229
217
The analysis has been performed using the Group exchange rates at the 30 June 2022 reporting date
of 1.16 €/£ (2021: 1.16 €/£); 165.35 JPY/£ (2021: 152.83 JPY/£); and 1.21 US$/£ (2021: 1.38 US$/£).
It is noted that while volatility exists in future income statements, due to the hedging of overdraft
and cash balances across currencies and subsidiaries, the balance sheet volatility in respect of
net funds is minimised as far as practical.
The Group is exposed to fluctuations in exchange rates on the translation of net assets and profits
earned by foreign subsidiaries. These profits are translated at the prior month closing exchange
rate during the year, which is an approximation of the rates at the date of the transaction.
Credit Risk
The top ten customers (all of which are major businesses or large public sector clients) account for
16.65% (2021: 20.76%) of the Group’s revenue and hence there is some customer reliance risk,
although the biggest single customer accounts for 3.11% (2021: 5.42%) of revenue.
As at the year-end, 89% (2021: 93%) of our net trade receivables balances were in terms and
therefore the Board believes these balances do not present a significant credit risk which could
lead to a loss for the Group.
Ageing of trade receivables, net of impaired balances, is as follows:
2022
£’000
2022
%
2021
£’000
2021
%
Current
6,590
89%
4,448
93%
Past due
Less than 30 days overdue
445
6%
133
3%
30 to 60 days overdue
251
3%
133
3%
More than 60 days overdue
114
2%
30
1%
7,400
100%
4,744
100%
The average credit period taken on sales is 68 days (2021: 47 days).
The Group has provided for specific trade receivables where the recoverability is highly unlikely and
provided an expected loss provision across all other debtors. As at 30 June 2022 the total loss
allowance was £93,000 (2021: £209,000).
Receivables are written off against the impairment provision when management considers the
debt is no longer recoverable.
Liquidity Risk
The Group ensures that there are sufficient levels of committed facility, cash and cash equivalents
to ensure that the Group is at all times able to meet its financial commitments.
The Group has available cash of £8.2 million and forecasts indicate this is sufficient to meet the
Group’s day to day operating obligations, including under assessment of reasonably possible
downside sensitivities.
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.106
Blancco Technology Group plc | Annual Report and Accounts 2022
26. Financial Instruments – Risk Management continued
The table below summarises the contractual maturity profile of the undiscounted cash flows of the
Group’s financial liabilities:
2022
Effective
interest
rate
(%)
2022
Less than
one year
£’000
2022
One to
five years
£’000
2022
Over five
years
£’000
2021
Effective
interest
rate
(%)
2021
Less than
one year
£’000
2021
One to
five years
£’000
2021
Over five
years
£’000
Trade and other
payables
–
5,689
–
–
–
4,700
–
–
Lease liabilities
1-10
1,040
1,794
–
1-11
680
1,298
–
Contingent
consideration
–
1,347
–
–
–
–
–
–
Bank borrowings
3
–
2,000
–
–
–
–
–
–
8,076
3,794
–
–
5,380
1,298
–
27. Deferred Tax Assets/(Liabilities)
At 1 July
2021
£’000
Recognised
in the
income
statement
£’000
Recognised
upon
acquisition
£’000
Recognised
in equity
£’000
Reallocations
and
utilisations
£’000
Exchange
£’000
At 30
June
2022
£’000
Intangible assets
(4,504)
274
(686)
–
–
(259)
(5,175)
Short term timing
differences
20
(55)
(394)
–
–
(1)
(430)
Employee benefits
1,513
183
–
(578)
–
–
1,118
Tax losses
435
145
–
–
1
42
623
(2,536)
547
(1,080)
(578)
1
(218)
(3,864)
At 1 July
2020
£’000
Recognised
in the
income
statement
£’000
Recognised
in equity
£’000
Reallocations
and
utilisations
£’000
Exchange
£’000
At 30
June
2021
£’000
Property plant and equipment
50
(50)
–
–
–
–
Intangible assets
(4,938)
157
–
–
277
(4,504)
Short term timing differences
100
(56)
–
–
(24)
20
Employee benefits
1,024
(120)
609
–
–
1,513
Tax losses
681
40
–
(141)
(145)
435
(3,083)
(29)
609
(141)
108
(2,536)
Deferred tax assets are recognised to the extent that they are considered recoverable against the
future profits of the Group. No deferred tax asset has been recognised in relation to taxation on UK
losses amounting to £1.1 million (2021: £2.0 million).
Certain deferred tax assets and liabilities have been offset to the extent permitted by IAS 12. The
deferred tax asset balance of £0.1 million (2021: £0.1 million) as at 30 June 2022 is made up of a
UK deferred tax asset balance of £nil (2021: £nil) and overseas deferred tax assets of £0.1 million
(2021: £0.1 million). The deferred tax liability balance as at 30 June 2022 is made up wholly of
overseas deferred tax liabilities of £4.0 million (2021: £2.7 million).
Of the total deferred tax asset of £0.1 million (2021: £0.1 million), all of this balance is current
(2021: £0.1 million current). Of the deferred tax liability of £4.0 million (2021: £2.7 million),
£0.5 million is current (2021: £0.5 million).
28. Called Up Share Capital
2022
Number
of shares
2022
£’000
2021
Number
of shares
2021
£’000
Allotted, called up and fully paid:
Ordinary shares of 2p
75,672,915
1,513
75,580,296
1,512
The Company has one class of ordinary shares, which carry no rights to fixed income. The holders
of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per
share at meetings of the Company.
Share Issue
On 10 December 2021, 92,619 ordinary shares were allotted at par in respect of vesting of an
award under the Company’s Performance Share Plan. Following this, the total number of Ordinary
Shares in issue is 75,672,915 and the total number of voting rights is 75,672,915.
Share Premium
This arises on issue of the Company’s shares over and above the nominal value of the shares,
less any expenses of issue incurred in issuing equity.
Merger Reserve
The merger reserve arose in respect of the premium arising on the ordinary shares issued as
consideration for the acquisition of shares in another Company.
Translation Reserve
The translation reserve comprises all foreign currency differences arising from the translation of
the financial statements of foreign operations.
Capital Redemption Reserve
The capital redemption reserve arose on the cancellation of part of the Group’s previous
share capital.
Employee Benefit Trust (EBT)
Of the issued share capital at 30 June 2022, 671,285 shares (30 June 2021: 1,133,839) are held
by the Employee Benefit Trust and are treated as treasury shares.
Financial Statements
.107
Blancco Technology Group plc | Annual Report and Accounts 2022
29. Share-Based Payments
Performance Share Plan
The Group has implemented long term incentive arrangements for its senior management and Directors in order to align their interests to those of the shareholders. The Blancco Performance Share Plan
(“the PSP”) was established in March 2018 and several tranches of awards have been granted since this date. The PSP was created to incentivise Executive Directors and senior management and drive long
term sustainable growth for shareholders.
It is intended to grant annual awards under the PSP to Executive Directors and senior management. The maximum opportunity is 170% of base salary.
These awards will usually be subject to stretching performance conditions over a three-year period. The performance measures and targets will be selected annually by the Remuneration Committee prior to
the grant of awards and will closely align to the Company’s key business objectives.
Awards granted in the year ended 30 June 2020 shall vest based 33% on IFRS revenue, 33% adjusted operating cash flow and 33% adjusted operating profit. Performance will be assessed based on
outcomes for the year ended 30 June 2022, with vesting taking place after the completion of the audit of the financial statements. These are considered key financial metrics for the Company. Strong
performance in these areas is essential to the long-term success of the business and delivering value for shareholders. Previously vested awards were assessed on invoiced revenue and adjusted operating
cash flow with 50% weighting applied to each metric before the Remuneration Committee revised the vesting criteria in the year ended 30 June 2020.
Details of share awards movement during the year is as follows:
Scheme
Performance Share Plan
(March and May
2018 Award)
Performance Share Plan
(July and November
2018 Award)*
Performance Share Plan
(November
2018 Award)
Performance Share Plan
(October
2019 Award)
Performance Share Plan
(November
2020 Award)
Performance Share Plan
(October
2021 Award)
Performance Share Plan
(December
2021 Award)
Total
Exercise Price
0.0-2.0p
0.0p
2.0p
0.0p-2.0p
0.0p-2.0p
0.0-2.0p
0.0p
Year in which options are exercisable
2020
2021
2021
2022
2023
2024
2024
At 1 July 2020
1,685,513
1,314,184
59,836
1,043,859
–
–
–
4,103,392
Granted
–
–
–
–
685,159
–
–
685,159
Exercised**
(1,358,057)
–
–
–
–
–
–
(1,358,057)
Lapsed
(327,456)
–
–
–
–
–
–
(327,456)
At 30 June 2021
–
1,314,184
59,836
1,043,859
685,159
–
–
3,103,038
Granted
–
–
-
–
–
475,654
263,323
738,977
Exercised***
–
(1,129,231)
(59,836)
–
–
–
–
(1,189,067)
Lapsed
–
–
–
(114,698)
(75,162)
(65,576)
–
(255,436)
At 30 June 2022
–
184,953
–
929,161
609,997
410,078
263,323
2,397,512
* 302,632 shares issued in July and 1,011,552 shares issued in November
** share price at the date of exercise was 195.0p
*** share price at the date of exercise was 243.5p
The remaining shares to be exercised with respect to the 2021 vesting represent those awarded to employees who can exercise the option within 10 years of the vesting date, and as at 30 June 2022 are
currently not yet exercised.
The fair values for the outstanding PSP awards were calculated using the inputs outlined in the table below:
Performance Share Plan
(July
2018 Award)
Performance Share Plan
(November
2018 Award)
Performance Share Plan
(October
2019 Award)
Performance Share Plan
(November
2020 Award)
Performance Share Plan
(October
2021 Award)
Performance Share Plan
(December
2021 Award)
Date of grant
25 July 2018
5 November 2018
2 October 2019
11 November 2020
5 October 2022
14 December 2022
Fair value of options granted (per share) at date of grant
76.0 p
106.3 p
127.5 p
190.5 p
2.742 p
2.742 p
Expected term (years)
2.92
2.67
2.75
2.67
2.75
2.59
Settlement
Equity
Equity
Equity
Equity
Equity
Equity
Notes to the Accounts continued
for the year ended 30 June 2022
Financial Statements
.108
Blancco Technology Group plc | Annual Report and Accounts 2022
29. Share-Based Payments continued
Sharesave Plan (SAYE)
The Company operates a Sharesave scheme which is available to full time employees based in the
UK, and other operating locations with a significant staff footprint, including Executive Directors
of the Company. The Sharesave plan gives employees the unconditional right to purchase shares
at an option price (which is at a 20% discount to the market price at the date the exercise price
is determined) on or after the maturity date which is three years after the grant date provided the
employee remains with the Company or its subsidiaries and completes the saving obligation prior
to the maturity date. Maturity is deferred to the extent an employee hasn’t completed the total
saving obligation after three years.
The fair value of services received in return for shares options granted under this scheme is
calculated with reference to the fair value of the award on the date of grant. This is spread over the
period during which the employee becomes entitled to the award and adjusted to reflect expected
levels of vesting. The Black Scholes pricing model has been used to calculate the fair value of
options awarded under the Sharesave plan.
The assumptions used in the model are illustrated in the table below:
Grant
Date
Fair Value at
Measurement
Date
Exercise
Price
Expected
Volatility
Expected
Term
Risk Free
Rate
Sharesave
Scheme –
Tranche 1
29 March 2021
£1.00
£2.28
38.8%
3 years
0.16%
Sharesave
Scheme –
Tranche 2
4 April 2022
£0.70
£1.62
34.7%
3 years
1.36%
The expected volatility has been based on the historical volatility of the Company’s share price
over the previous historical period in line with the expected term. There is a zero assumption for
dividend yield on the options awarded.
The total share-based payment cost represents the accrued value of both schemes during the
year, in addition to directly attributable fees of implementing and administering the schemes and
accrued employer taxes in respect of the plans. This corresponded to a charge of £1.4 million
(2021: £1.5 million). The accrued IFRS2 expense for the schemes has been recorded as an equity
settled share-based payment scheme and accordingly has been recognised as an expense
through the consolidated income statement, with a corresponding credit in equity of £1.3 million
(2021: £1.1 million) which represents the movement in the cumulative compensation expense in
the year. This has increased year on year due to the acceleration of charge for participants in the
Sharesave scheme who withdrew from the first tranche and rejoined the second tranche due to
the reduction in exercise price in the second tranche.
The total amount recognised in equity of £0.7 million (2021: £1.7 million) includes the impact of
deferred tax (see note 10).
As of 30 June 2022, dilution in respect of Blancco share awards granted in the last 10 years
represented 4.4% of the Company’s issued share capital.
30. Related Party Transactions
Transactions between Blancco Technology Group Plc and its subsidiaries, which are related
parties, have been eliminated on consolidation. No disclosure of these transactions is required
under IAS24.
All transactions with Directors are included in the Directors’ Remuneration Report from page 68
as well as in the key management personnel disclosures in note 8.
31. Subsequent events
There were no subsequent events that took place following the year ended 30 June 2022.
Financial Statements
.109
Blancco Technology Group plc | Annual Report and Accounts 2022
Note
30 June
2022
£’000
30 June
2021
£’000
Assets
Non-current assets
Investments
5
82,618
18,435
82,618
18,435
Current assets
Debtors
6
31,539
82,847
31,539
82,847
Creditors:
Amounts falling due within one year
8
(13,926)
(5,375)
Net current assets
17,613
77,472
Total assets less current liabilities
100,231
95,907
Creditors:
Amounts falling due after more than one year
9
(2,000)
–
(2,000)
–
Net assets
98,231
95,907
Equity
Called up share capital
1,513
1,512
Share premium account
21,103
21,103
Merger reserve
5,861
5,861
Capital redemption reserve
417
417
Retained earnings
69,337
67,014
Equity shareholders’ funds
98,231
95,907
The Company’s profit for the year was £2.6 million (2021: loss of £3.4 million).
The financial statements on pages 110 to 115 were approved by the Board of Directors and authorised for issue on 27 September 2022
and were signed on its behalf by:
Adam Moloney
Chief Financial Officer
Company number: 05113820
Company Balance Sheet
As at 30 June 2022
Financial Statements
.110
Blancco Technology Group plc | Annual Report and Accounts 2022
Company Statement of Changes in Equity
For the year ended 30 June 2022
Called up
share capital
£’000
Share
premium
account
£’000
Merger
reserve
£’000
Retained
earnings
£’000
Capital
redemption
reserve
£’000
Total
shareholders’
funds
£’000
Balance as at 1 July 2020
1,507
21,103
5,861
69,369
417
98,257
Loss for the year
–
–
–
(3,443)
–
(3,443)
Issue of shares
5
–
–
(5)
–
–
Recognition of share-based payments
–
–
–
1,093
–
1,093
Balance as at 30 June 2021
1,512
21,103
5,861
67,014
417
95,907
Profit for the year
–
–
–
2,586
–
2,586
Issue of shares
1
–
–
–
–
1
Repurchase of Company’s own shares
–
–
–
(1,546)
–
(1,546)
Recognition of share-based payments
–
–
–
1,283
–
1,283
Balance as at 30 June 2022
1,513
21,103
5,861
69,337
417
98,231
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
Notes to the Company Financial Statements
for the year ended 30 June 2022
1. Basis of Preparation
Blancco Technology Group Plc is a public limited company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. Details of its registered office are published on
page 54.
These financial statements have been prepared in accordance with Financial Reporting Standard
101, Reduced Disclosure Framework (FRS101) and the Companies Act 2006 (the Act) as
applicable to companies using FRS101. FRS101 sets out a reduced disclosure framework for a
qualifying entity as defined in the standard which addresses the financial reporting requirements
and disclosure exemptions in the individual financial statements of qualifying entities that
otherwise apply the recognition, measurement and disclosure requirements of international
accounting standards in conformity with the requirements of the Companies Act 2006.
The Company is a qualifying entity for the purposes of FRS101.
FRS101 sets out amendments to international accounting standards in conformity with the
requirements of the Companies Act 2006 that are necessary to achieve compliance with the Act
and related Regulations.
In these financial statements, the Company has applied the exemptions under FRS101 in respect
of the following disclosures:
•
A cash flow statement and related notes.
•
Comparative period reconciliations for share capital and tangible fixed assets.
•
Disclosures in respect of transactions with wholly owned subsidiaries.
•
Disclosures in respect of capital management.
•
The effect of new but not yet effective IFRSs.
•
Disclosures in respect of compensation of key management personnel.
•
Disclosures of transactions with a management entity that provides key management
personnel services to the Company.
•
Certain disclosures required by IFRS13 Fair Value Measurement and the disclosures required by
IFRS7 Financial Instrument disclosures.
•
IFRS2 Share-based payment in respect of Group settled share-based payments.
The financial statements have been prepared under the historical cost convention and on a going
concern basis.
Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to
present its own profit and loss account.
2. Accounting Policies
The significant accounting policies applied in the preparation of the Company financial statements
are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
2.1 Going Concern
The Group meets its day-to-day working capital requirements through its cash reserves, overdraft
facility and a revolving credit facility.
Further information on the Group’s business activities, together with the factors likely to affect its
future development, performance and position is set out in the Strategic Report from page 1.
Further information on the financial position of the Group, its cash flow, liquidity position and
borrowing facility is described in this review.
In addition, note 26 to the Group’s financial statements includes the Group’s objectives, policies
and processes for managing its capital, and its exposures to credit risk and liquidity risk.
After making enquiries, the Board has a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for a period of at least 12 months
from the date of these financial statements. Accordingly, the Board continues to adopt the going
concern basis in preparing the Annual Report and Accounts.
2.2 Investments
Investments are stated in the balance sheet of the Company at cost less amounts written off.
Amounts denominated in foreign currency are translated into sterling at historical exchange rates.
2.3 Deferred Taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of the taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise from the goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interest in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in the income statement, except when
it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
2. Accounting Policies continued
2.4 Foreign Currencies
Transactions denominated in foreign currencies are translated into sterling at the exchange rate
ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated
into sterling at rates of exchange ruling at the balance sheet date. All other exchange differences
are dealt with in the income statement.
2.5 Pensions
The Company offers defined contribution pension arrangements to employees. Payments to
defined contribution pension schemes are expensed as incurred. The Company does not operate
any defined benefit pension arrangements.
2.6 Share-based Payments
Some Directors are granted share options which may, if certain performance criteria are met, allow
these employees to acquire shares in the Company. The specific schemes are detailed in note 29
to the Group’s financial statements.
The fair value of options granted after under equity settled schemes are recognised as an
employee expense with a corresponding increase in equity. The fair value is measured at grant
date and spread over the period during which the employees become unconditionally entitled
to the options. The fair value of the options granted is measured using the share price preceding
the grant date and the number of shares the employee is awarded. The fair value of the awards is
reassessed at each reporting date based on the likelihood of achieving the vesting criteria and the
likely level of attainment of the vesting criteria.
Where the Company grants options over its own shares to the employees of its subsidiaries
it recognises, in its individual financial statements, an increase in the cost of investment in its
subsidiaries equivalent to the equity-settled share-based payment charge recognised in its
consolidated financial statements with the corresponding credit being recognised directly
in equity.
2.7 Own Shares Held by the Blancco Employee Benefit Trust
Transactions of the Company-sponsored EBT are treated as being those of the Company and
are therefore consolidated in the Parent Company and Group financial statements. In particular,
the trust’s purchases of shares in the Company are debited directly to equity.
2.8 Financial Instruments
Financial assets and financial liabilities are recognised in the Company’s balance sheet when the
Company becomes a party to the contractual provisions of the instrument.
Equity Instruments
Equity instruments issued by the Company are initially recorded at the proceeds received, net of
direct issue costs.
Non-derivative Financial Instruments
Non-derivative financial instruments include cash and cash equivalents, trade and other
receivables, trade and other payables and borrowings.
•
Cash and cash equivalents comprise cash balances and short-term deposits. Bank overdrafts
that are repayable on demand are shown within creditors.
•
Amounts due from subsidiaries are recognised initially at fair value. Subsequent to initial recognition
they are measured at amortised cost, less a provision for expected lifetime credit loss.
•
Trade creditors and amounts due to subsidiaries are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised cost.
•
Bank borrowings are recognised initially at fair value net of directly attributable transaction
costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between
the proceeds (net of transaction costs) and redemption value is recognised in the income
statement over the period of the borrowings using the effective interest method.
The Company measures the loss provision on amounts due from subsidiaries by estimating the
likelihood of a loss and by benchmarking against industry default rates.
3. Critical Judgements and Estimations in Applying the Group’s
Accounting Policies
3.1 Judgements
In the process of applying the Company’s accounting policies, management makes various
judgements that can significantly affect the amounts recognised in the financial statements.
None of the judgements are considered material.
3.2 Estimations
Additionally, management are also required to make judgements over certain balances which
are uncertain and therefore require a degree of estimation as to the amounts to be settled in
future periods.
The material areas of estimation uncertainty are considered to be the following:
•
Impairment of Intercompany Receivables
Determining to what extent a loss provision is required against intercompany receivables. The
receivable is illiquid given the annual cash flow generation of subsidiaries, therefore historical
data of the Group is insufficient to provide evidence on default rates. Management must make a
best estimate using alternative data in order to assess the likelihood of a loss. An increase in the
loss provision rate by 1% would increase the provision by £0.3 million (2021: £0.8 million).
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
4. Staff Costs
The company has 5 employees (2021: 5) being the Chief Financial Officer and four Non-executive
Directors (2021: the Chief Financial Officer and four Non-executive Directors). Aggregate staff
costs of the employees are as follows:
Aggregate staff costs
2022
£000
2021
£000
Wages and salaries
724
745
Social security costs
96
97
Other pension costs
4
3
824
845
Details of the Directors’ remuneration is given in note 8 to the consolidated financial statements.
5. Investments
Shares in
subsidiary
undertakings
£‘000
Cost
At 1 July 2021
18,435
Additions
71,540
Disposal
(5,647)
Return of capital contributions
(1,710)
At 30 June 2022
82,618
Impairment
1 July 2021
–
At 30 June 2022
–
Net book value
30 June 2022
82,618
30 June 2021
18,435
The additions in the year relate predominantly to the issue of new shares by the Group’s subsidiary,
Blancco Software Services Limited, the proceeds of which were used to immediately settle
outstanding receivables, as well as the grant of options over the Company’s own shares to the
employees of subsidiaries, which is accounted for as an increase to investments with corresponding
credit in equity. Details of the schemes are found in note 29 to the consolidated accounts.
The disposals in the year relate to the disposal of the investment in the issued share capital of
Blancco Technology Group Ireland Limited to another group company and the return of capital
contributions relate to recharged amounts for shares vested under the performance share plan.
See note 18 in the consolidated accounts for a list of all the Company’s direct and
indirect investments.
6. Debtors
Amounts falling due within one year:
2022
£’000
2021
£’000
Amounts due from subsidiaries
31,923
84,230
Less: loss allowance
(638)
(1,685)
Amounts due from subsidiaries net of provision
31,285
82,545
Prepayments and other debtors
254
302
31,539
82,847
Amounts due from subsidiaries are repayable on demand and interest is charged at one month
EURIBOR rate (where applicable) plus a benchmarked margin.
7. Deferred Tax
Deferred tax assets were attributable to depreciation in excess of capital allowances and losses.
There was no movement in deferred tax assets in 2022.
Movements during the previous year are as follows:
2021
At 1 July
2020
£’000
Recognised in
income statement
£’000
At 30 June
2021
£’000
Depreciation in excess of capital allowances
51
(51)
–
Losses
137
(137)
–
188
(188)
–
Deferred tax assets are recognised to the extent that they are considered recoverable against
future taxable profits of the Company. No deferred tax asset has been recognised in relation to
tax losses (2021: £nil). The unrecognised deferred tax asset on losses amounts to £1.0 million
(2021: £1.0 million).
Notes to the Company Financial Statements continued
for the year ended 30 June 2022
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
8. Creditors: Amounts Falling Due Within One Year
2022
£’000
2021
£’000
Trade creditors
57
15
Overdraft
6,208
2,169
Amounts due to subsidiaries
6,826
2,290
Accruals
835
901
13,926
5,375
Interest is charged on certain amounts due to subsidiaries at the central bank short term lending
rate in the jurisdiction where the subsidiary is based.
The overdraft of £6.2 million (2021: £2.2 million) is offset against pooled cash balances held by
other Group companies.
9. Creditors: Amounts Falling Due After More Than One Year
2022
£’000
2021
£’000
Bank loans and other borrowings
2,000
–
The terms of the Company’s borrowing facility are disclosed in note 23 to the consolidated
financial statements.
10. Subsequent events
There were no subsequent events that took place following the year ended 30 June 2022.
Financial Statements
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Blancco Technology Group plc | Annual Report and Accounts 2022
Notice of AGM
Notice is given that the Annual General Meeting of Blancco Technology Group Plc (“the Company”)
will be held at 2.00pm on Tuesday 13 December 2022 at the offices of Buchanan, 107 Cheapside,
London EC2V 6DN and via Microsoft Teams to consider the following resolutions, of which
numbers 1 to 5 will be proposed as ordinary resolutions, and numbers 6 and 7 as
special resolutions:
1. To receive the Annual Report and Accounts for the year ended 30 June 2022.
2. To approve the Directors’ Remuneration Report for the year ended 30 June 2022.
3. To re-elect Rob Woodward as a Director of the Company.
4. To reappoint PricewaterhouseCoopers LLP as auditor of the Company to hold office until the
conclusion of the next general meeting at which accounts are laid before the members and to
authorise the Directors to determine their remuneration.
5. That, the Directors be generally and unconditionally authorised in accordance with section 551
of the Companies Act 2006 (“the Act”), to exercise all the powers of the Company to allot shares
in the Company and to grant rights to subscribe for, or to convert any security into, shares in
the Company (“Rights”) up to an aggregate nominal amount of £504,732 during the period
commencing on the date of the passing of this resolution and such authority shall expire, unless
previously revoked, renewed or varied, at the conclusion of the next Annual General Meeting of
the Company or on 12 March 2024, whichever is earlier, and provided further that the Company
shall be entitled before such expiry to make an offer or agreement which would or might require
shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled
to allot shares and grant Rights under such offer or agreement as if this authority had
not expired.
Special resolutions
6. That, subject to the passing of resolution 5 above, the Directors be empowered under section
570 of the Act to allot equity securities as defined in section 560 of the Act, for cash and/or to
sell ordinary shares held in treasury for cash as if section 561(1) of the Act did not apply to any
such allotment or sale, provided that this power shall be limited to:
a. the allotment of equity securities and sale of treasury shares in connection with an offer of,
or invitation to apply for, equity securities:
i.
to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings; and
ii. to holders of other equity securities as required by the rights of those securities or as the
directors otherwise consider necessary,
iii. and so that the directors may impose any limits or restrictions and make any
arrangements which they consider necessary or appropriate to deal with any treasury
shares, fractional entitlements, record dates, legal, regulatory or practical problems in,
or under the laws of any territory or any other matter; and
Additional Information
The following does not form part of the Annual Report and Accounts 2022
b. the allotment of equity securities or sale of treasury shares otherwise than under paragraph
(a) above up to a nominal amount of or (in the case of any other equity securities) giving
the right to subscribe for or convert into relevant shares having a nominal amount, not
exceeding in aggregate, £151,420,
and this power shall expire, unless previously revoked, renewed or varied, at the conclusion of
the next Annual General Meeting of the Company or on 12 March 2024, whichever is earlier,
except that the Company may before such expiry make offers or agreements which would or
might require equity securities to be allotted (and treasury shares to be sold) after such expiry
and the Directors may allot securities (and sell treasury shares) under such offer or agreement
as if this power had not expired.
7. That the Company be generally and unconditionally authorised for the purposes of section
701 of the Act to make market purchases (within the meaning of section 693(4) of the Act) of
ordinary shares of 2 pence each in the capital of the Company, provided that:
a. the maximum number of shares which may be purchased is 7,570,986;
b. the minimum price (exclusive of expenses) that may be paid for a share is 2 pence;
c. the maximum price (exclusive of expenses) which may be paid for a share shall be an amount
equal to 5% above the average market value for the Company’s shares for the five business
days immediately preceding the day on which the share is contracted to be purchased; and
d. the authority conferred by this resolution shall, unless previously revoked, renewed or varied,
expire at the end of the next Annual General Meeting of the Company, or on 12 March 2024,
whichever is earlier, save that the Company may, before such expiry, enter into a contract for
the purchase of shares which would or might be completed wholly or partly after such expiry
and the Company may purchase shares under any such contract as if this authority had
not expired.
By order of the Board
Lorraine Young
For and on behalf of Lorraine Young Company Secretaries Limited
Company Secretary
27 October 2022
Registered Office
Suite 1, Chapel House,
Thremhall Park
Start Hill
Bishop’s Stortford
Hertfordshire,
CM22 7WE
Additional Information
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Blancco Technology Group plc
Notes:
1. Entitlement to appoint proxies
Members are entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on their
behalf at the meeting. You may appoint more than one proxy in relation to the AGM provided that each proxy
is appointed to exercise the rights attached to a different share or shares which you hold. A proxy need not be
a member of the Company. If you complete and return a form of proxy you will still be able to attend the AGM,
speak and vote in person if you wish.
2. Appointing proxies
You may appoint one or more proxies by:
(a) Completing the accompanying form of proxy and returning it to Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol BS99 6ZY (together with any power of attorney or other written
authority under which it is signed);
(b) Using the online proxy appointment service at www.eproxyappointment.com if you have signed up
to receive e-communications from the Company. You will need to enter the Control Number,
Shareholder Reference Number (SRN) and your PIN from the communication you will have received
from the Company for this purpose. If you have not signed up to receive e-communications from the
Company but would like to do so, please contact Computershare on 0370 707 1345 or you
can sign up at www.investorcentre.co.uk; or
(c) Submitting your proxy electronically by using the CREST proxy service. CREST members may appoint a
proxy or proxies electronically via Computershare (ID number 3RA50) in accordance with note 3 below.
To appoint more than one proxy, you may either photocopy the form of proxy accompanying this Notice or
contact Computershare on 0370 889 4099 to request additional forms of proxy. If you return more than one
proxy appointment in respect of the same shareholding, the proxy last received by Computershare before
the latest time for the receipt of proxies will take precedence. To be valid, any proxy form or other instrument
appointing a proxy must be deposited with Computershare or lodged via the CREST proxy service (in each
case) no later than 2.00pm on 9 December 2022.
3. Electronic proxy appointment through CREST
CREST members who wish to appoint a proxy or proxies using the CREST electronic proxy appointment
service may do so by following the procedures described in the CREST Manual. CREST personal members
or other CREST sponsored members, and those CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a
CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited
(EUI) specifications and must contain the information required for such instructions, as described in the CREST
Manual. The message, regardless of whether it relates to the appointment of a proxy or to an amendment to
the instructions given to a previously appointed proxy must, in order to be valid, be transmitted so as to be
received by the issuer’s agent (ID 3RA50) by 2.00pm on 9 December 2022.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to
the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that
EUI does not make available special procedures in CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of
the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored
member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of
the CREST system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
4. Joint holders
In the case of joint holdings, only one holder needs to sign the form of proxy. The vote of the senior holder
who tenders a vote will be accepted to the exclusion of the votes of the other joint holders, seniority for this
purpose being determined by the order in which the names stand in the register of members in respect of
joint holdings.
5. Entitlement to attend and vote
In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those whose names
are on the register of members of the Company at the close of business two days (excluding non-working
days) before the meeting or any adjourned meeting, shall be entitled to attend or vote at the meeting in respect
of the number of shares registered in their name at that time. Changes to entries in the register of members
after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
6. Corporate representatives
Any corporation which is a member can appoint one or more corporate representatives who may exercise on
its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
7. Voting rights
As at 20 October 2022 (being the latest practicable date prior to the publication of this Notice), the Company’s
issued share capital consisted of 75,709,857 ordinary shares, carrying one vote each. There were no shares
held in treasury, therefore the total voting rights in the Company as at that date were 75,709,857.
8. Communicating with the Company in relation to the AGM
Except as provided above, shareholders wishing to communicate with the Company in relation to the
AGM should write to the Company Secretary c/o the Company’s registered office or send an email to
investors@blancco.com.
You may not use any electronic address provided either in this notice or any related documents (including the
proxy form), to communicate with the Company for any purposes other than those expressly stated.
9. Voting results
The Company will publish the results of the AGM via a regulatory announcement and on its website
www.blancco.com.
Additional Information
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Blancco Technology Group plc
Notice of AGM continued
EXPLANATION OF BUSINESS
Resolution 1: To receive the report and accounts
Company law requires the Directors to present the Annual Report and Accounts of the Company
to shareholders in respect of each financial year.
Resolution 2: To approve the remuneration report
As the Company’s shares are traded on AIM, it is not required to put the remuneration report to
shareholders for approval. However, the Directors recognise the importance of adopting best
practice corporate governance and are therefore putting the remuneration report to shareholders
for approval voluntarily. The remuneration report is set out on pages 68 to 72 of the Annual Report.
It describes the Group’s policy on remuneration and gives details of Directors’ remuneration for the
year ended 30 June 2022. The vote is advisory and does not affect the actual remuneration paid to
any individual Director.
Resolution 3: To re-elect a Director
Rob Woodward retires by rotation under the Company’s articles of association and offers himself
for re-election at the AGM. Rob’s biographical details are given on page 53 of the Annual Report.
His deep knowledge of the TMT sector and extensive experience of international corporate
advisory work help ensure the Group’s strategy is aligned with its external commercial environment.
In addition, the time he has spent on other boards, his knowledge of corporate governance and his
leadership skills ensure the effective running of the Board.
The Board unanimously recommends Rob’s re-election.
Resolution 4: To reappoint the auditors and authorise the Board to determine
their remuneration
A resolution to reappoint PricewaterhouseCoopers will be put to shareholders at the Annual
General Meeting. In line with usual practice, shareholders are also asked to authorise the Board to
determine the remuneration of the auditor. In practice, the audit committee will consider the audit
fees and recommend them to the Board.
Resolution 5: Directors’ authority to allot shares
At the 2021 Annual General Meeting, the Directors were given authority to allot shares in the
Company and Resolution 5 seeks to renew that authority until the conclusion of the next Annual
General Meeting or 12 March 2024, whichever is earlier. The resolution would give the Directors
authority to allot ordinary shares, and grant rights to subscribe for or convert any security into
shares in the Company, up to an aggregate nominal value of £504,732. This amount represents
one-third of the issued ordinary share capital of the Company as at 20 October 2022, the latest
practicable date prior to the publication of this document. The Directors have no present intention
to allot new shares other than in connection with the employee share incentive plans.
Resolution 6: Disapplication of pre-emption rights
If Directors of a company wish to allot shares in the Company, or to sell treasury shares, for cash
(other than in connection with an employee share scheme) company law requires that these shares
are offered first to shareholders in proportion to their existing holdings.
The purpose of Resolution 6 is to authorise the Directors to allot shares in the Company, or sell
treasury shares, for cash (i) in connection with a rights issue; and, otherwise, (ii) up to a nominal
value of £151,420, equivalent to 10% of the total issued ordinary share capital of the Company as
at 20 October 2022, without the shares first being offered to existing shareholders in proportion to
their holdings. This level of authority is required in order to give the Company flexibility in the event
of acquisition opportunities and major shareholders will be consulted in advance of the authority
being exercised.
Resolution 7: Authority to buy back shares
Under company law, the Company requires authorisation from shareholders if it wishes to purchase
its own shares. Resolution 7 seeks to renew the authority given at the last Annual General Meeting.
The resolution specifies the maximum number of shares that may be purchased (approximately
10% of the Company’s issued share capital) and the highest and lowest prices at which they may
be bought.
If the Company buys back its own shares it may cancel them immediately or hold them in treasury.
Treasury shares may be sold for cash, cancelled or used to satisfy awards under employee share
schemes. The Directors believe that it is desirable for the Company to have this choice as it will
give flexibility in the management of its capital base.
The Directors have no present intention of exercising this authority but will keep under review
the Company’s potential to buy back its shares, taking into account other investment and
funding opportunities. The authority will only be used if in the opinion of the Directors this will
result in an increase in earnings per share or would otherwise be in the best interests of
shareholders generally.
No dividends will be paid on, and no voting rights will be exercised in respect of, treasury shares.
Additional Information continued
Additional Information
.118
Blancco Technology Group plc
Glossary
Adjusted Earnings Per Share: Adjusted earnings are stated before amortisation or impairment of
acquired intangible assets, amortisation of bank fees, exceptional income, 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.
Adjusted EBITDA: Adjusted Operating Profit with depreciation of property, plant and equipment
and amortisation of intangible assets added back.
Adjusted Operating Cash Flow or AOCF: 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.
Adjusted Operating Profit or AOP: 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) and disposal
of subsidiaries (because these represent a one-off non-cash charge to the consolidated
income statement).
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.
Carbon Neutrality: Operating with net-zero carbon dioxide emissions from activities and
investments in carbon dioxide removal projects.
Carrier: One of the three key sectors of the Mobile Market, along with Retail and Third Party
Logistics. A mobile carrier is a wireless service provider that supplies cellular connectivity services
to mobile phone and tablet subscribers.
Cash Conversion: Adjusted Operating Cash Flow stated as a percentage of adjusted
operating profit.
CEAP: The EU Circular Economy Action Plan.
Circular Economy: A system that is restorative or regenerative by intention and design. It replaces
the end-of-life concept with restoration and aims for the elimination of waste through the superior
design of materials, products, systems and business models.
Compound Annual Growth Rate (CAGR): Accumulated growth rate over a number of periods.
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 reported within the balance sheet and reassessed at each reporting period.
Constant Currency Basis: The results of the Group when translating the performance of foreign
operations in to sterling at the foreign exchange rates observed in the prior period. This allows
comparison of like-for-like results with the elimination of foreign exchange rate fluctuations.
Data Sanitisation: The managing of data that is no longer required by organisations.
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.
E-waste: Discarded electronic appliances such as mobile phones, computers and other
electronic equipment.
Earn-out: See Contingent Consideration.
Enterprise: One of the three end user markets alongside Mobile and ITAD. Blancco provides data
sanitisation software that integrates within the Enterprise ecosystem.
EU Circular Economy Action Plan (CEAP): The EU’s Circular Economy Action Plan (CEAP) was
a comprehensive body of legislative and non-legislative actions adopted in 2015, which aimed to
transition the European economy from a linear to a circular model.
Forward Contracts (currency hedging): A banking 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.
GDPR: General Data Protection Regulation. The General Data Protection Regulation (GDPR) is a
legal framework that sets guidelines for the collection and processing of personal information from
individuals who live in the European Union.
Gross Debt: The total external borrowings of the Group, net of capitalised bank fees.
IDC: International Data Corporation. The International Data Corporation is a premier global provider
of market intelligence, advisory services and events, offering global, regional and local expertise on
technology and industry opportunities and trends.
ITAD: IT Asset Disposition. This is the business built around disposing of obsolete or unwanted
equipment in a safe and ecologically responsible manner.
M&A: Mergers and acquisitions. This is the Group’s activity in acquisitions of other companies,
both to full and part ownership.
Mobile: One of our three end user markets along with ITAD and Enterprise. The mobile market has
three main sectors, Carrier, Retail and Third Party Logistics.
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Blancco Technology Group plc
Net Funds: Cash stated after offsetting gross debt against cash reserves.
Non-controlling interest: The Group does not fully own one of its subsidiaries, and for that in
which the ownership is shared, the other party is the non-controlling interest. This is relevant for
the subsidiary the Group owns 80% of the share capital; in the current and prior period this is only
one sales office. At the end of each reporting period, the Group must allocate the non-controlling
interest of its share of profits and net assets in the subsidiary in which the ownership is shared,
which are recorded through the consolidated income statement and Consolidated Balance
Sheet respectively.
OEM: An Original Equipment Manufacturer.
Operating Cash Flow: Cash flows originating from transactions in the core operational activities
of the Group, for example cash flows resulting from revenues earned and expenditure paid. This
excludes cash flows relating to investing or financing activities.
Operating Margin: Operating profit stated as a percentage of revenue.
R&D: Research and development into new technologies to improve client service, reduce costs or
enhance revenue.
Repair Services business: Part of the Aftermarket Services segment which was disposed of on 4
April 2016 to Communications Test Design Inc. for a consideration of €103.5 million (£79.9 million).
This represents the Group’s previous Depot Solutions and Advanced Solutions divisions, excluding
Digital Care.
Retail: One of the three key areas in the Mobile market, along with Carrier and Third Party Logistics.
Save As You Earn (SAYE): A sharesave scheme operated by the Group since March 2020,
allowing staff to join a scheme to purchase shares at a discount after a three year saving
requirement has been fulfilled.
Subscription (revenue stream): Contracts with customers which are for a fixed term, typically one
to three years.
TCFD: The Task Force on Climate-related Financial Disclosures.
Third Party Logistics: An area of the Mobile market, alongside Carrier and Retail, consisting of
companies who take possession of large volumes of handsets and prepare them ready for resale,
repair of recycle. For these companies, efficiency is crucial as they are focused on processing high
volumes in the shortest time frame to retain handset value.
United Nations Sustainable Development Goals (SDGs): An agenda set by the United Nations
to promote global improvements in socio-economic conditions, by driving improvements in
areas such as poverty and inequality, and engaging in strategies which improve health, education,
environmental matters and spur economic growth.
Volume (revenue stream): Contracts with customers which involve an up-front delivery of
licences, and typically no additional obligations to the customer.
Working Capital: A measure of the Group’s current liquidity by showing how much cash has
been invested in day-to-day trading. Working capital is the sum of stock, current debtors, contract
assets, current creditors and accrued payments.
Glossary continued
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Blancco Technology Group plc
Blancco Technology Group plc
Suite 1, Chapel House,
Start Hill
Bishop’s Stortford
Hertfordshire, CM22 7WE
T: +44 (0) 20 3637 6283
Company number: 05113820