Slide 1: Half Year Results
Half Year Results for the six months ended 30 November 2015 21 January 2016
Slide 2: Agenda
Agenda • Highlights • Growth track record • Group financial performance • Escrow • Cyber security landscape • Assurance • Domain Services • Current trading & outlook • Appendix 2
Slide 3: Highlights
Highlights 50% 57% 7% 250 Group revenue Assurance revenue Escrow revenue up 50% to £93.5m up 57% to £73.8m up 7% to £16.4m FTSE 250 listed company 26% 33% 4% £92.6 Acquisition of Adjusted Group Assurance Escrow operating Fox-IT on 27 operating profit up operating profits profits up 4% to November 20
Slide 4: 15 consecutive years of record growth
15 consecutive years of record growth Revenue (£m) - CAGR 28% Adjusted operating profit (£m) - CAGR 17% 160 30 140 25 120 20 100 80 15 60 10 40 5 20 0 0 05 06 07 08 09 10 11 12 13 14 15 16 05 06 07 08 09 10 11 12 13 14 15 16 Full year Fully diluted adjusted EPS (p) - CAGR 20% Dividend (p) - CAGR 25%
Slide 5: Revenues
Revenues 2015 2014 Growth Organic (£m) (£m) Escrow UK 12.0 11.3 7% 7% Escrow Europe 1.6 1.6 3% 3% Escrow US 2.8 2.5 10% 10% Escrow 16.4 15.4 7% 7% Security Consulting 59.7 36.1 65% 13% Software Testing & Web Performance 14.1 10.8 31% 31% Assurance 73.8 46.9 57% 17% Domain Services 3.3 - - - Total re
Slide 6: International mix of revenue
International mix of revenue UK Europe Rest of world 2015 64% 9% 27% £59.5m £8.8m £25.2m UK Europe Rest of world 2014 53% 10% 37% £33.3m £6.3m £22.7m 6
Slide 7: Operating profits
Operating profits Margin 2015 2014 Growth (%) (£m) (£m) Contribution Escrow 56% 9.2 8.9 4% Assurance 14% 10.3 7.7 33% Corporate - (2.8) (2.3) 20% Adjusted operating profit pre 19% 16.7 14.3 17% Domain Services Domain Services - (1.0) (1.9) 47% Adjusted operating profit 17% 15.7 12.4 26% 7
Slide 8: Earnings per share & dividends
Earnings per share & dividends 2015 2014 Growth (£m) (£m) Adjusted operating profit 15.7 12.4 26% Adjusted pre tax profits 14.9 12.1 24% Adjusted fully diluted EPS 5.0p 4.5p 11% No. of fully diluted shares (m) 236.6 211.4 12% Interim dividend per share 1.5p 1.3p 15% 8
Slide 9: Reconciliation to pre-tax profits
Reconciliation to pre-tax profits £m 20 15.7 – 26% year on year growth 15 (2.6) (0.5) 3.0 10 8.6 (2.3) (4.1) (0.7) 7.5 (1.1) 5 0 Adjusted Acquisition Restructuring Intangible Adjustment Amortisation Share based Operating Interest and Pre-tax operating related costs write down to contingent of acquir
Slide 10: Cashflow
Cashflow 2015 2014 (£m) (£m) Cash generated from operations 7.9 11.7 Net interest paid (1.1) (0.4) Income taxes paid (3.4) (0.7) Capital expenditure (5.5) (9.7) Acquisition of businesses (78.0) (2.3) Cash balances from acquisition 1.8 - Dividends paid (6.1) (4.9) Cash (outflow)/inflow before financi
Slide 11: Cash, capital & banking
Cash, capital & banking • Net debt £73.1m before second part (£63.2m) of equity raise (£31.3m at Nov 2014) • Facility increased to £80m RCF, £30m term loan plus £5m overdraft to Nov 2020 • Strong underlying cash conversion at 116% of operating profits (105% in 2014) • Capital expenditure £5.5m (2014
Slide 12: Escrow
Escrow Escrow Revenue £16.4m Contribution £9.2m Margin 56% Headcount 168 FTE UK Europe US Revenue : Revenue : Revenue : £12.1m £1.6m £2.8m Headcount : Headcount : Headcount : 111 FTE 14 FTE 43 FTE 12
Slide 13: Escrow - Escrow UK
Escrow - Escrow UK 2015 2014 Growth (£m) (£m) Escrow revenue 16.4 15.4 7% Escrow UK revenue 12.1 11.3 7% Escrow contribution 9.2 8.8 4% Escrow • Continued solid performance • Renewals up 5% to £19.3m (2014: £18.3m) Escrow UK • Prices increased in 2015 • Verification performance growth continues • Te
Slide 14: Escrow - Europe & US
Escrow - Europe & US 2015 2014 Growth (£m) (£m) Escrow US revenue 2.8 2.5 10% Escrow Europe revenue 1.6 1.6 3% Overseas • All are stable & growing • Strong performance from US team • Excellent performance from Europe – constant currency 11% growth • Global account management stronger & performing we
Slide 15: Cyber security landscape - an arms race
Cyber security landscape - an arms race 15
Slide 16: Something has to change
Something has to change Source: Trust in the Internet Survey 2015, NCC Group plc together with IDG Research Services 17
Slide 17: Board responsibility
Board responsibility • Cyber-crime is single biggest threat to corporates & individuals • Defending against damage & disruption is costly – time, reputation, confidence • Cyber risk awareness still poor at board-level – ignorance is no excuse/defence • Cyber security & associated risk mitigation is
Slide 18: We have the right to be secure
We have the right to be secure • Legislation being introduced from Europe in next couple of years • General Data Protection Regulation (GDPR) • Aiming for adoption early 2016 • New rules to be applicable two years after that • Breaches of rules will be punished with fines of up to 4% of global turno
Slide 19: Assurance – global reach
Assurance – global reach TECHNICAL CONSULTING DAYS SOLD 110k 6 MILLION IPs scanned Total Assurance 1,300 last year 75k FTE In the UK 900k LIVE 1.2 BILLION IPs scanned last year web pages monitored last year 20
Slide 20: Assurance
Assurance Assurance Revenue £93.5m Contribution £10.3m Margin 14% Headcount 1305 FTE UK Europe US Headcount : Headcount : Headcount : 809 FTE 276 FTE 206 FTE Australia Headcount : 14 FTE 21
Slide 21: Assurance
Assurance 2015 2014 Growth (£m) (£m) Assurance revenue 93.5 62.3 17% Assurance contribution 10.3 7.7 33% • Revenue growth of 57% • Excellent organic growth of 17% • Margin including Accumuli 14% (2014: 17%) - target still 20% • Global offering - compelling, competitive proposition • Continued staff
Slide 22: Assurance
Assurance 2015 2014 Growth (£m) (£m) Security Consulting 59.7 36.1 65% Software Testing & Web Performance 14.1 10.8 31% Security Consulting • Revenues grew by 65% • US & UK are working effectively for international clients • World’s largest security team Software Testing & Web Performance • Web Perf
Slide 23: Domain Services
Domain Services 2015 2014 (£m) (£m) Domain Services revenue 3.3 - Domain Services operating loss (1.0) (1.9) • Domain Assured – ICANN anti abuse product • Escrow services flourished • Open Registry affected badly by ICANN delays • Rationalisation of Group Managed Services products • Managed Services
Slide 24: Current trading & outlook
Current trading & outlook • Continued strong, solid growth across Escrow • Assurance • Security Consulting is now a global force • Service offerings further expanded by Accumuli • Strong organic growth set to continue • Fox-IT • Adds threat Intelligence (TI) & TI led managed services capabilities •