BGLOBAL PLC 
By Bglobal plc (AIM: BGBL), the leading provider of smart energy solutions and services to the UK energy market is pleased to announce its half-yearly financial report for the six months ended 30 September 2013.
Commenting on the results John Grant, Chairman said: "One conclusion I have drawn so far from work on the strategic review is that our business remains undervalued. Utiligroup alone produced EBITDA in the period of £0.46 million. Our Nutech Training business remains poised to capitalise on the need to develop the skills required to support the Government's carbon-reduction programmes. Our end-to-end solutions continue to find new applications and Bsmart has grown organically to a point at which it is soon to reach a monthly breakeven position and feedback from Bsmart customers has been positive as typically they save over 20% on their utility bills."
Highlights:
- Revenue of £6.17 million (2012: £5.82 million from continuing operations)
- Recurring revenues increased by 2.1% to £4.04 million (2012: £3.95 million from continuing operations), up 47.4% in the Software and services segment offsetting losses in metering business
- Gross margin up to 62.5% (2012: 54.1%)
- Adjusted Operating loss £0.91 million1 (2012: £1.16 million loss2)
- Adjusted loss before taxation of £0.95 million loss1 (2012: £1.19 million loss2)
- Loss before tax of £2.16 million (2012: £0.83 million loss)
- Cash balances at 30 September 2013 £2.52 million
- Two new entrants brought in via "supplier in a box" since 1 April 2013, plus the extension of software and services to a supplier who has launched a new residential brand in the market·
Tim Jackson-Smith, Group Chief Executive Officer added: "Following the strategic review carried out by KPMG, we have already taken significant cost out of the business (approximately £1.0 million on an annualised basis) and strict cash management procedures are now in place. We believe that a third party may be better placed to develop the potential in our Metering business and take it forward to the next phase of its development allowing the Board to focus on its software and services businesses of Utiligroup, Nutech and Bsmart."
CHAIRMAN'S STATEMENT
I report below on the Group's results for the half year ended 30 September 2013. This is my first statement as Chairman since my appointment in August, and so I want to take the opportunity to explain the work the Board and the Company has been undertaking in the past few months and my initial impressions of the business.
Strategic Review
As requested by shareholders, the Board has been conducting a strategic review of the Group. This has been a collaborative process, which has involved a great deal of time commitment on behalf of the whole of our Board, senior management, KPMG and other advisers. The purpose of the exercise has been to improve the performance of the business and enhance shareholder value. The first outcomes of the review have included taking significant cost out of Bglobal's head office, re-focusing the business on its customers and implementing strict cash management procedures. In addition, as previously announced, we have decided to explore a potential sale of our metering business as we believe that a third party may be better placed to take this business to the next phase of its development.
One conclusion I have drawn so far from work on the strategic review is that our business remains undervalued by the market. Utiligroup alone produced EBITDA in the period of £0.46 million. Our Nutech training business remains poised to capitalise on the need to develop the skills required to support the Government's carbon-reduction programmes. Our end-to-end solutions continue to find new applications and Bsmart has grown organically to a point at which it is soon expected to reach a monthly breakeven position. Feedback from Bsmart customers has been positive as typically they save over 20% on their utility bills. Bsmart has been further strengthened as Pure World Technologies Limited, a competitor, went into administration. Whilst we have had to write off our convertible debt of £0.2million to this company, Bsmart was able to acquire some of its key assets as part of the debenture security we had.
Business Development
The Group's staff is enthusiastic and ambitious and have the ability to grow and develop many of our product lines both organically and by finding new markets for them. I have sought to channel their energies into projects, which have a short-to-medium prospect of financial return, whilst ensuring longer term projects are progressed at an appropriate pace. There has, historically, been a focus on revenue generation which, in part, has not been tempered by cost controls befitting a Group of our size. The financial performance of the Group has, accordingly, been disappointing over this period as costs have been incurred for projects, which were a long way from being cash generative.
Results
Total revenue increased by 6% to £6.17 million (2012: £5.82 million). The gross margin has increased to 62.5% (2012: 54.1%) as the Group further concentrates on the software and services business and has brought the Draig business in house. Administrative costs from continuing operations increased to £4.56 million (2012: £4.10 million) with operating costs within the new businesses of Nutech and Bsmart totalling £0.51 million (2012: £0.18 million) and costs acquired with Draig of £0.20 million. The Draig acquisition has helped save costs from the cost of sales line and will, in the future, improve our gross margins. Since the period end, we have reduced ongoing administrative costs by approximately £1 million per annum.
Adjusted Operating Loss for the period was £0.91 million (2012: £1.16 million loss) after adjusting for the one-off items detailed in the accounts. The reported basic loss per share, including the one-off items, was 1.93p (2012: 0.66p loss). However, despite the trading deficit, the Group's cash balances at 30 September 2013 were £2.52 million.
Dividend
The Board is not recommending a dividend, as all funds are currently needed for the Group's working capital requirements.
Board and employees
I have had the pleasure over the last few months of meeting many of the Group's employees. They are clearly one of the Group's great strengths and I would like to take this opportunity to thank them for their support during my transition into this role. I feel very strongly that one of my roles as Chairman is to imbue the Group with a culture of honesty, transparency, effectiveness and efficiency. I shall strive to live up to those standards and ensure the Group reflects them. I would also like to thank my Board colleagues for their support and advice in what has been a difficult period for the Company.
Conclusion
Implementing the first batch of recommendations from the strategic review is the Board's priority for the next quarter. The management team, led by our CEO Tim Jackson-Smith, will continue to pursue any significant profitable growth opportunities that have been identified to date and to develop our existing businesses in line with our strategy. I look forward to being able to report on more positive developments in future.
John Grant
Chairman
CHIEF EXECUTIVE'S STATEMENT
The six months to 30 September have presented a number of challenges for the Group, but despite these I am pleased to report that turnover in the period increased to £6.17 million, a 6% increase on the same period last year. Whilst the Metering business has continued to face difficult trading conditions, Utiligroup has had its strongest ever start to a year and continues to flourish. The two new businesses, Nutech and Bsmart, which were established during the last financial year, are now starting to build momentum and both are pursuing a number of interesting opportunities.
Software and Related Services
Utiligroup's performance was ahead of our expectations in the period and the business continues to see strong demand for its software and services. Utiliserve has had a particularly successful six months and was over 25% ahead of budget and has delivered a profit in the 6 months to 30 September 2013. Turnover increased by 63% to £2.97 million in the six months ended 30 September 2013 (2012: £1.82 million). Recurring revenue in the period was £2.38 million (2012: £1.61 million)
Utilisoft has brought two more companies into the market as energy suppliers through its "Supplier in a Box" product, has extended the provision of software and services to a supplier who has launched a new residential brand in the market and has a strong pipeline of customers keen to enter the UK energy market. The business has benefited from its hard work in the previous year, which helped to build a solid recurring revenue stream that provided a stable platform from which it could grow and that has been further built upon during the period.
The recent developments in the UK energy market present a number of opportunities for Utiligroup to further exploit its position as an integral part of that market. Calls from the Prime Minister for more competition to the Big 6 and his desire for there to be a Big 60 has helped to drive demand for the software and services that Utiligroup provides.
Metering and Data Services
Revenue from meter installations was £1.24 million (2012: £2.03 million) which was slightly ahead of the Board's expectations. The Group's accredited data collection, data aggregation and meter operation revenue for the period was £1.66 million (2012: £2.11 million). The volume of meter installations during the period has been in line with our expectations and has stabilised since the dramatic fall in volume seen in the last financial year. As the deadline regarding the mandate to install smart meters into properties in profile classes 5-8 draws ever closer, we have seen increased interest from a number of our customers to assist them in fulfilling their obligations.
Following the completion of the strategic review, it has also been decided that we will no longer pursue certain research and development initiatives and this has lead to an exceptional impairment charge of £0.48 million against capitalised development costs.
Training Services
The delay to the mass rollout of smart meters has meant that Nutech Training has not performed in line with our expectations and its turnover for the six months ending 30 September was only £0.09 million. The management team has continued to look at ways of creating revenue streams for the business that enable it to leverage its accreditations without leading to direct investment in training facilities. I am pleased to report that Nutech has recently signed a franchise agreement with Future Energy Solutions, who will open a new training centre in the North East. The centre will operate under Nutech's accreditations, which will allow it to provide dual fuel smart meter installation and other relevant training. A number of other organisations have approached Nutech about the franchise model and the business continues to discuss the training needs of a number of energy suppliers ahead of the mass rollout of smart meters. I am confident that Nutech is well placed to capitalise on the training opportunities that will arise over the coming years.
Energy Management
The Group's energy management business, Bsmart Energy Solutions, has had a slower start to the year than we had expected but has still grown its turnover significantly from last year, generating a turnover of £0.32 million in the six months to 30 September. The business continues to see demand for its products and services and we expect the recent energy price increases to see growing interest in the energy saving solutions that Bsmart offers and that companies, such as JD Sports, are benefiting from.
Strategic review
On 11 November 2013, the Board announced the conclusion of the strategic review and the initial conclusions resulting from that. Following detailed consultation with, and the receipt of a report from, KPMG the Board has begun implementing a number of actions in order to improve the performance of the business and enhance shareholder value. These actions include taking significant cost out of Bglobal's head office, re-focusing the business on its customers and implementing strict cash management procedures. In addition, the Board has decided to explore a potential sale of its metering business, B Global Metering Limited.
A disposal of the metering business will allow the Group to focus its resources on the software and services side of the business which the Board believes is capable of generating significant shareholder value. A number of changes within the UK energy market create opportunities for, in particular, Utiligroup. Indeed, the advent of the Data Collection Company (DCC), following the recent award of contracts by DECC, generates the need for integration software to be developed and sold into Utiligroup's existing customer base and the need for more competition within the UK energy market stimulates demand for the 'Supplier in a Box' product as more businesses consider becoming energy suppliers. We have also seen increased interest from the public sector in the 'Supplier in a Box' model with local authorities and housing associations seeing their own entry into the market as a way of alleviating fuel poverty amongst their constituents and tenants.
All of these opportunities leave Utiligroup in a strong position to capitalise on its position within the UK energy market and to continue delivering strong results for the Group.
Outlook
I would like to highlight the quality, commitment and dedication of the Group's employees. The Group has had a number of distractions to deal with in this financial year, some of which have unfortunately been played out in public, but despite this, our colleagues have continued to focus on doing the best job they can and on delivering a quality service to all our customers. The improved performance on many fronts for the six months ending 30 September 2013 is a testament to their hard work and abilities.
The Board remains committed to creating value for all our stakeholders and to improving the performance of the business. We have already taken significant cost out of the business (approximately £1.0 million on an annualised basis) and strict cash management procedures are now in place. As stated above, we believe that a third party may be better placed to develop the potential in our Metering business and take it forward to the next phase of its development and, accordingly, the decision has been taken to explore a sale of this business. I am pleased to say that we have had an encouraging level of interest in this business and look forward to updating shareholders as this process evolves.
Tim Jackson-Smith
Chief Executive Officer
To download the full H1 Financial Statement, click here.|
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