After a difficult six months for Blancco Technology Group PLC (LON:BLTGB), we believe that management has stabilised the business and put it on a course for sustainable growth. A focus on recurring-type contracts should provide better visibility. We have taken a conservative approach to forecasts using the lower end of revenue guidance; if management is able to drive growth at a faster rate than this then we see scope for substantial upside to forecasts.
Clearing out the books
FY17 results reflect the contract reversals and provisions previously announced. Blancco reported revenue growth of 31%, or 6% on a constant currency, organic basis. The company also restated FY16 results to reverse one of the contracts that had previously been provided for in FY17, resulting in higher than forecast adjusted operating profit in FY17. Following the recent issues with revenue recognition and overdue debts, management undertook a thorough review of contracts to ensure revenues have been correctly reported and debtor balances are recoverable. In addition, controls have been strengthened to ensure better financial oversight. The search for a permanent CEO is underway.
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