Slide 1: Half Year Results
Half Year Results for six months ended 30 November 2016 19 January 2017
Slide 2: Agenda
Agenda Overview Growth track record Group financial performance Assurance Industry landscape Escrow Current trading & outlook Appendix 2
Slide 3: Double digit growth despite challenges
Double digit growth despite challenges 35% 42% 14% PSC & Group revenue up 35% to £125.8m Assurance revenue up 42% to £104.8m Escrow revenue up 14% to £18.7m VSR Joined the Group 15% 18% 14% 1,909 Group adjusted Assurance Escrow EBITDA increased EBITDA up 18% EBITDA up 14% Employees by 15% to £21.3m
Slide 4: Difficult H1 - impacting full year
Difficult H1 - impacting full year • Three unrelated contract cancellations mostly in Security Consulting - worth £14m - £18m • Deferral of Government contracts in Fox-IT - part of integration • Managed services contract renewals: • Proved more time consuming - unacceptable terms • Lower renewal rat
Slide 5: Disappointing H1 - still 16 years of growth
Disappointing H1 - still 16 years of growth Revenue (£m) - CAGR 28% Adjusted operating profit (£m) - CAGR 16% 250 50 200 40 150 30 100 20 50 10 0 0 05 06 07 08 09 10 11 12 13 14 15 16 17 05 06 07 08 09 10 11 12 13 14 15 16 17 Half year Fully diluted adjusted EPS (p) - CAGR 17% Dividend (p) - CAGR 23
Slide 6: Revenues
Revenues 2016 2015 Growth Organic (£m) (£m) (%) (%) Security Consulting 90.5 59.6 52% 44% Software Testing & Web Performance 14.3 14.1 1% 1% Assurance 104.8 73.8 42% 21% Escrow UK 12.8 12.1 6% 6% Escrow US 4.0 2.8 43% 43% Escrow Europe 1.9 1.6 19% 19% Escrow 18.7 16.4 14% 14% Total Assurance & Escro
Slide 7: International mix of revenue
International mix of revenue UK Europe Rest of world 2016 49% 19% 32% £61.6m £24.0m £40.2m UK Europe Rest of world 2015 64% 9% 27% £59.5m £8.8m £25.3m 7
Slide 8: Group EBITDA & operating profit
Group EBITDA & operating profit Margin 2016 2015 Growth (%) (£m) (£m) (%) Assurance 13% 13.1 11.1 18% Escrow 57% 10.6 9.3 14% Head Office Costs - (2.4) (1.8) 30% Group EBITDA 17% 21.3 18.5 15% Depreciation - (2.5) (1.3) 92% Amortisation - (1.6) (0.5) 32% Group adjusted operating profit* 14% 17.3 16.
Slide 9: Reconciliation of profit
Reconciliation of profit 25 £m 21.3m FY (3.8m) HY (1.6m) FY (5.5m) 20 HY (2.5m) 17.3m FY (1.1m) HY (0.6m) 16.7m FY (0.6m) FY (4.2m) HY (0.3m) 15 HY (3.4m) FY (1.0m) FY (10.6m) HY (0.5m) HY (5.1m) 10 7.3m 5 0 Group Amortisation Depreciation Adjusted Net Adjusted Unwinding of Exceptional Share Amortis
Slide 10: Earnings per share & dividends
Earnings per share & dividends 2016 2015 Growth (£m) (£m) (%) Group adjusted EBITDA 21.3 18.5 15% Adjusted operating profit 17.3 15.7 10% Adjusted pre tax profit 16.7 14.9 5% Adjusted fully diluted EPS 4.6p 5.0p (8%) Fully diluted shares (m) 278.6 236.6 42% Interim dividend per share 1.50p 1.50p - 1
Slide 11: Cashflow
Cashflow 2016 2015 (£m) (£m) Cash generated from operations 13.4 7.9 Net interest (0.9) (1.1) Income taxes (0.3) (3.4) Gross capital expenditure (8.0) (5.5) Acquisition of businesses (29.9) (78.0) Cash balances from acquisition 1.8 1.8 Dividends (8.7) (6.1) Cash outflow before financing activities (
Slide 12: Cash, working capital & capitalisation
Cash, working capital & capitalisation • Ratio of cash flow before interest & tax - 103% of operating profits (2015: 116%) - adjusted for exceptional items (basis to be revised at year end) • Trade & other receivables £77.3m (2015: £57.8m) - due to Fox-IT & acquisitions • Accrued income £23.8m (2015
Slide 13: Banking & consideration payments
Banking & consideration payments • Group’s net debt decreased to £48.8m (Nov 2015: £73.1m) • Total debt facility of £112.5m - £80m RCF, £27.5m term loan & £5m overdraft • Acquisitions & deferred consideration: • PSC & VSR - initial consideration - £15.7m ($20.3m) • FortConsult - earn out considerati
Slide 14: Assurance
Assurance Assurance Revenue £104.8m EBITDA £13.1m Margin 13% Headcount 1,612 FTE UK Europe US Headcount : Headcount : Headcount : 926 FTE 337 FTE 315 FTE Asia Pacific Headcount : 34 FTE 14
Slide 15: Assurance
Assurance 2016 2015 Growth (£m) (£m) (%) Assurance revenue 104.8 73.8 42% Assurance EBITDA 13.1 11.1 18% Assurance operating profit 10.2 10.3 (1%) • Revenue growth of 42% (2015: 57%) - 36% on a constant currency basis • Strong organic growth of 21% (Nov 2015: 17%) to £89.2m • US revenue up 38% to £2
Slide 16: Assurance
Assurance 2016 2015 Growth Constant (£m) (£m) (%) Currency (%) Security Consulting 90.5 59.6 52% 44% Software Testing & Web Performance 14.3 14.1 1% 1% Security Consulting • Revenues grew by 52% - constant currency growth 44% • Organic growth 26% • Managed Services revenue £19.0m (Nov 2015: £13.2m)
Slide 17: Assurance
Assurance Managed Services • World class security operations centres - 24/7 • Serves over 900 customers & 5,000 devices across 50 countries • Managed security scanning & monitoring • Over 6,500 application, infrastructure & monitoring scans per month • Six million IP address annually Fox-IT Integrat
Slide 18: GDPR is coming - 25 May 2018
GDPR is coming - 25 May 2018 • Confirmation that UK will adopt General Data Protection Regulation (GDPR) • Allow individuals to regain control & ownership of their data • Most breaches go unreported but that is about to change • Two key areas: • Privacy by design - include privacy considerations fro
Slide 19: Board responsibility
Board responsibility • Cyber security & associated risk mitigation is a Board’s responsibility • Cultural change is needed - must move from reactive to proactive approach • Security policies should be as familiar as accounting policies to Boards • Risk register must include cyber security • Boards m
Slide 20: Escrow
Escrow Escrow Revenue £18.7m EBITDA £10.6m Margin 57% Headcount 166 FTE UK Europe US Revenue : Revenue : Revenue : £12.8m £1.9m £4.0m Headcount : Headcount : Headcount : 112 FTE 20 FTE 34 FTE 20
Slide 21: Escrow
Escrow 2016 2015 Growth (£m) (£m) (%) Escrow revenue 18.7 16.4 14% Escrow EBITDA 10.6 9.3 14% Escrow operating profit 10.3 9.2 12% Escrow UK revenue 12.8 12.1 6% Escrow • Revenue grew by 14% (2015: 7%) - 8% on a constant currency basis • Verification testing worldwide order book - £2.8m (Nov 2015: £
Slide 22: Escrow
Escrow 2016 2015 Growth Constant (£m) (£m) (%) Currency % Escrow US revenue 4.0 2.8 43% 18% Escrow Europe revenue 1.9 1.6 19% 0% International • US revenue grew sharply by 43% (Nov 2015: 10%) • European revenue grew by 19% (Nov 2015: 3%) • New General Manager in US to continue growth - promotion & r
Slide 23: Current trading & outlook
Current trading & outlook • Continued strong, solid growth across Escrow • Assurance well positioned for GDPR impact • Security Consulting now global force - size of some nation’s capabilities • Strong organic growth set to continue & allied to good staff retention • Fox-IT integration taking place
Slide 24: Locations
Locations Europe North America Asia-Pacific Manchester - Head Office Atlanta, GA Singapore Amsterdam Austin, TX Sydney Basingstoke Boston. MA Cambridge Campbell, CA Copenhagen Chicago, IL Middle East Cheltenham Kitchener, ON Dubai Delft New York, NY Edinburgh San Francisco, CA Glasgow Seattle, WA The