View
1
Download
0
Category
Preview:
Citation preview
Half Year Results for the six months ended 30 November 2013 January 2014
Agenda • Highlights
• Growth track record
• Group financial performance
• Group Escrow & Assurance
• Artemis
• Current trading & outlook
• Appendix
2
Highlights
Assurance operating profits up
15% to £6.3m
3
Assurance revenue up
15% to £39.2m
Adjusted diluted EPS up 16% to
4.24p
Group revenue
up 12% to £54.0m
Group Escrow
revenue up 7% to £14.8m
Escrow UK revenue up
7% to £10.8m
Group Escrow
operating profits up 8%
to £8.4m
Interim dividend up 16% to 1.14p
Assurance organic revenue
growth 13%
Assurance operating profits up
15% to £6.3m
Artemis acquired
uncontested gTLD
0
20
40
60
80
100
120
05 06 07 08 09 10 11 12 13 140
5
10
15
20
25
30
05 06 07 08 09 10 11 12 13 14
Revenue (£m) - CAGR 27% Adjusted operating profit (£m) - CAGR 17%
0.00
2.00
4.00
6.00
8.00
10.00
05 06 07 08 09 10 11 12 13 14
Fully diluted adjusted EPS (p) - CAGR 22%
0.000.501.001.502.002.503.003.50
05 06 07 08 09 10 11 12 13 14
Dividend (p) - CAGR 28%
Full year
Interim
Growth track record
4
Revenues 2013 (£m)
2012 (£m)
Growth (%)
Organic growth (%)
Revenue
Escrow UK 10.8 10.1 7% 7%
Escrow Europe 1.6 1.6 5% 5%
Escrow US 2.4 2.2 8% 8%
Group Escrow 14.8 13.9 7% 7%
Security Testing 34.7 29.9 16% 15%
Web Performance 4.5 4.3 5% 5%
Assurance 39.2 34.2 15% 13%
Total revenue 54.0 48.1 12% 11%
5
Operating profitability Margin
(%) 2013 (£m)
2012 (£m)
Growth (%)
Contribution
Group Escrow 57% 8.4 7.7 8%
Assurance 16% 6.3 5.5 15%
Operating contribution 27% 14.7 13.2 11%
Artemis - (0.8) - -
Corporate - (2.1) (1.9) (11)%
Adjusted operating profit 22% 11.8 11.3 4%
Adjusted pre tax profits 11.4 10.9 5%
Adjusted operating profit margin - 22% 24% -
Adjusted fully diluted EPS 4.24p 3.67p 16%
Dividend per share 1.14p 0.98p 16%
6
Reconciliation of adjustments
7
Exceptional Acquisition
Related Income/ (Costs)
Exceptional Legal Costs
Amortisation Share Based
Payments Adjusted Operating
Profit
Reported Operating
Profit
1.9
(0.2)
(1.3)
(0.6)
11.8 11.6
£m
14
13
12
11
10
9
8
7
6
Interest Unwind of
the Discount
Pre-Tax Profits
(0.4) (0.1)
11.1
Cash, capital & banking • Continued strong cash conversion at 104% of operating profits (114% in 2012) • Net debt £26.2m (£28.1m at Nov 2012) • £40m RCF plus £5m overdraft to July 2016 • Capital expenditure £4.5m (2012: £2.2m)
• Tangible assets - £1.3m • Artemis development - £1.2m • Operational systems infrastructure & product upgrades - £1.3m
o SaaS & registry data escrow developments - £0.4m o Web Monitoring product upgrades - £0.9m
• New group wide IT system - £0.7m
• Maximum deferred consideration due is £4.3m • Matasano - Full earn out expected to be paid - £3.9m
o £1.7m paid in Dec 2013 - earn out & retention o £2.2m balance due in Dec 2014
• Intrepidus - Full earn out settlement agreed at £0.4m due in Jan 2014
8
IT systems Legal claim & SAP • Mediation took place with Ciber UK, part of Ciber Inc • No settlement agreed • Group committed to seek resolution via appropriate legal channels New system selected & being implemented • Group wide solution based around Sage & SalesLogix • Solution now being rolled out through UK first • All divisions & functions have gone through full process redesign • Overseas operations will adopt the same common platform • Project will complete by December 2014 • Solution versatile to cover expansion & organic growth • Total spend expected to be around £3m
9
Cash flow
2013 (£m)
2012 (£m)
Cash generated from operations 10.1 8.3 Net interest paid (0.4) (0.5) Income taxes (paid)/repayment (2.1) 0.1 Acquisition of capital assets (4.5) (2.2) Acquisition of businesses (0.4) (7.9) Cash inflow/(outflow) before financing activities 2.7 (2.2) Receipt of bank loans 5.3 6.6 Proceeds from issue of shares 0.5 0.3 Purchase of own shares (1.0) 0.0 Dividends paid (4.4) (3.8) Increase in cash in the half year 3.1 0.9
10
International mix of business
11
2012
UK 61%
Rest of Europe 8%
Rest of World 31%
UK 65%
Rest of Europe 7%
Rest of World 28%
2013 Revenue
Group Escrow division
Escrow UK Revenue £10.8m
Headcount 105 FTE
Escrow Switzerland
Headcount 1 FTE
Escrow US Revenue £2.4m
Headcount 38 FTE
Group Escrow Revenue £14.8m Contribution £8.4m Headcount 157 FTE
Escrow Germany Headcount 3 FTE
12
Escrow Europe Total Revenue £1.6m
Headcount 14 FTE
Group Escrow & UK
Group Escrow • Escrow revenues increased by 7% • Escrow profits increased by 8% • SaaS & ICANN are delivering good opportunities • Renewals up 2% to £18.1m (2012: £17.7m) Escrow UK • Prices increased in 2013 • Verification performance growth continues • Terminations unchanged at 12%
2013 (£m)
2012 (£m)
Growth (%)
Group Escrow revenue 14.8 13.9 7%
Escrow UK revenue 10.8 10.1 7%
Group Escrow contribution 8.4 7.7 8%
13
Group Escrow - Europe & US
Overseas • Gaining traction with Escrow Associates brand in USA • North America is more co-ordinated • Excellent performance from Escrow Europe management team • Revitalised sales team delivering strong results • Overall global account management stronger & performing well
2013 (£m)
2012 (£m)
Growth (%)
Escrow US revenue 2.4 2.2 8%
Escrow Europe revenue 1.6 1.6 5%
14
Assurance division
UK 424 FTE
Chicago 18 FTE
Group Assurance Revenue £39.2m Contribution £6.3m Headcount 600 FTE
Australia
10 FTE
15
San Francisco
73 FTE
Seattle 20 FTE
New York
47 FTE
Austin 8 FTE
Global Associates
103
Assurance
Assurance • Solid organic growth - 13% • Margin currently at 16% (2012: 16%) - target still 20% • 703 FTE including 103 associates - over 300 recognised security testers • Research - recognised, responsible, credible & co-ordinated • Security market is consolidating - opportunities Security Testing, Audit and Compliance - UK & Europe • Staff development, recruitment & retention remains primary focus • Investment being made in forensics & operational response • Managed services continue to grow in size & importance
2013 (£m)
2012 (£m)
Growth (%)
Assurance revenue 39.2 34.2 15%
Assurance contribution 6.3 5.5 15%
16
Assurance
Security Testing, Audit and Compliance - Rest of the World • Matasano becomes East Coast brand • East Coast integration sees three NYC offices in to one from March • iSEC becomes West Coast brand • Research co-ordinated between North America & UK - clear policy Web performance • Strong new business & renewal rates c.90% • Renewals growing by 10% to £6.8m (2012: £6.2m) • Real User Monitoring product development to enhance the service further
2013 (£m)
2012 (£m)
Growth (%)
Assurance revenue 39.2 34.2 15%
Assurance contribution 6.3 5.5 15%
17
Assurance – market update • Most organisations have been hacked & will be unaware of it • Too many Boards “hope” it doesn’t happen “on my watch” but do not know
what “it” is • Cyber security should be in a business’ top three agenda items after trading
performance & succession planning Why? • Internet trust - continues to dwindle - Nation State, Snowdon, lawless • Social media & bring your own device - still not controlled • Industrial & cyber espionage - companies do not understand how real it is • Digital vandalism & hacktivism - knowledge of how to do it is increasing • Mobile malware - threat levels increasing, all information is mobile or tablet
available
18
Artemis
Making the internet a safer place • Entered into exclusive agreement to acquire uncontested gTLD -
appropriate for Artemis • ICANN .secure auction against Amazon expected September 2014 • Aim to offer a new & unique secure domain experience to address
consumer concerns: • Is this a trustworthy site? • Am I connected safely? • Will I get malware? • Is this company doing a good job with their security?
• Artemis platform target live date by end of Q1 2014/15 financial year • Staged investment expected to be c.£8m - capitalised c.£2.6m to date
19
Artemis
Progress • Build phase progressing well • Policies & security procedures defined • Beta customers using the developed system so far - converting
to paid for service • 30+ pioneers with opportunity to be “early adopters” • Expect to announce first wave of clients & rates in the next
financial year • Very strong levels of corporate interest - finance & retail sectors
20
Current trading & outlook
• Entered into exclusive agreement to acquire uncontested gTLD • Artemis on course to launch service in next financial year
• Escrow businesses structured to continue growing - actively recruiting • Assurance
• Security threat landscape is ideal market place • Scale & international reach is unique in security market • Consideration of assurance acquisitions
• Group orders & renewals of £51.4m (2012: £45.1m) • Group Escrow orders & recurring income of £20.8m (2012: £19.6m) • Assurance orders & recurring revenues £30.6m (2012: £25.5m)
• Confident about delivering yet another year of strong & consistent growth
21
Appendix
22
About NCC Group
A global information assurance specialist with an unrivalled breadth & depth of services, providing organisations worldwide with: • Freedom from doubt that their business critical material is protected -
through escrow & verification
• Freedom from doubt that their information is secure and their operations are compliant - through security testing, audit & compliance
• Freedom from doubt that their websites, software and applications are unflawed, effective and performing as they should be - through website performance & software testing.
23
Our services
24
Escrow agreements explained
• Escrow is a legal contract between three parties
• licensor (or owner) • licensee • an independent trusted third party
• Holds software source code or business critical material
• Provides protection from key supplier failure or failure of maintenance
• Demonstrates supplier’s commitment to client care
• Key part of disaster recovery & business continuity planning
Licensor
Sale of business critical
software
Licensee
Annual recurring fee
Deposit of source code
25
ICANN – Glossary of terms
• ICANN • Internet Corporation for Assigned Names and Numbers. Responsible for the coordination of the
internet’s naming systems
• gTLD • Generic Top Level Domain e.g. .secure, .book .bike .nyc
• Registry • The organisation with the responsibility for operating each gTLD (including maintaining a registry of the
domain names within the gTLD) e.g. Donuts, Verisign
• Registrar • ICANN-accredited company that processes registration for domain names e.g. Godaddy, 1&1.com.
• Domain Name Registrant • An individual or legal entity wishing to register a domain name under a generic top-level domain
("gTLD")
• WHOIS data • This is the specific information that relates to a domain e.g. who it is registered to, who registered it,
and contact information
• Registry Data Escrow Agreement • Ensures that a copy of the gTLD registration information & WHOIS data held by a registry operator is
protected, secure and held by an independent third party
26
Sector revenue concentrations
27
Software & computer services
30%
Banks & insurance
28%
Other 8%
Support services 5%
General retailers 5%
Central Government 4%
Manufacturing 3%
Healthcare 2%
Education 1%
Fixed & mobile communications 9%
Escrow revenue concentrations
General retailers 4%
Fixed & mobile communications
22%
Central government 3%
Local government 4%
Travel & leisure 4%
Education 3%
Support services 6%
Healthcare equiptment & services
6%
Banks & insurance 26%
Software & computer services
15%
Other 7%
28
Assurance revenue concentrations
29
Software & Computer Services
34%
Banks & Insurance 30%
Education 1%
Fixed & Mobile Telecommunications
7%
Other 4%
Central Government 5%
General Retailers 6%
Manufacturing 5%
Travel & Leisure 5%
Support Services 3%
Europe Manchester - Head Office
Cheltenham
Edinburgh
Leatherhead
London
Milton Keynes
Amsterdam
Munich
Zurich
North America Atlanta
Austin
Chicago
New York
San Francisco
Seattle
Australia Sydney
Recommended