Half year results for the six months ended 30 November ... · 15% . Group revenue up 15% to £62.3m...
Transcript of Half year results for the six months ended 30 November ... · 15% . Group revenue up 15% to £62.3m...
Half year results for the six months ended 30 November 2014 January 2015 1
AGENDA
Highlights 3
Group financial performance 4
Escrow 10
Assurance 14
Domain Services 18
Current trading & outlook 21
Appendix 22
2
15%
Group revenue up 15% to £62.3m
6%
Adjusted Group operating profit up
6% to £12.4m
14% Interim dividend up 14% to 1.3p
.trust launched
Open Registry group acquired
6% Adjusted diluted
EPS up 6% to 4.5p
4% Escrow revenue up 4% to £15.4m
6% Escrow operating profits up 6% to
£8.9m
11% Orders & renewals
up 11% totaling £57.2m
20% Assurance
revenue up 20% to £46.9m
23% Assurance
operating profits up 23% to £7.7m
.secure sold
105% Cash conversion
ratio
3
Revenues
4
2014 (£m)
2013 (£m)
Growth (%)
Constant currency
(%) Revenue
Escrow UK 11.3 10.8 5% 5%
Escrow Europe 1.6 1.6 (5%) 2%
Escrow US 2.5 2.4 7% 11%
Escrow 15.4 14.8 4% 5%
Security Consulting 36.1 27.2 33% 35%
Software Testing & Web Performance 10.8 12.0 (10%) (10%)
Assurance 46.9 39.2 20% 21%
Total Group 62.3 54.0 15% 17%
International mix of business
5
53% £33.3m
UK
37% £22.7m
Rest of world
10% £6.3m
Europe
2014 53% £33.3m
UK
31% £16.9m
Rest of world
8% £4.1m
Europe
61% £33.0m
2013
Operating profitability
6
Margin (%)
2014 (£m)
2013 (£m)
Growth (%)
Contribution
Escrow 58% 8.9 8.4 6%
Assurance 17% 7.7 6.3 23%
Operating contribution 27% 16.6 14.7 14%
Domain Services - (1.9) (0.8) 236%
Corporate - (2.3) (2.1) 11%
Adjusted operating profit 20% 12.4 11.8 6%
Adjusted pre tax profits 12.0 11.4 6%
Adjusted operating profit margin - 20% 22% -
Adjusted fully diluted EPS - 4.50p 4.24p 6%
Dividend per share - 1.30p 1.14p 14%
Reconciliation of adjustments
Exceptional costs
Amortisation of acquired intangibles
Share based payments
Reported operating
profit
Adjusted operating
profit
Interest
(0.1)
(0.9)
(0.3)
12.4
11.1
£m
14
13
12
11
10 Unwinding of
discount Pre-tax profits
(0.4) (0.1)
10.6
7
14.3 – 14% year on year growth
(1.9)
Pre Domain Services operating
profits
Domain Services
operational expenditure
Cash, capital & banking
• Continued strong cash conversion at 105% of operating profits (104% in 2013) • Net debt £31.3m (£26.2m at Nov 2013) • Facility increased to £55m RCF plus £5m overdraft to July 2016 • Capital expenditure £9.7m (2013 in £4.5m)
• Domain Services development costs - £4.1m • Tangible assets including office refurbishments - £2.7m • Group wide IT & operational systems, infrastructure & product upgrades - £2.9m
• Future maximum deferred consideration due £8.8m all profit based earnouts • FortConsult - £1.8m
• June 2015: £0.7m • June 2016: £1.1m
• Open Registry group of companies - £7.0m • April 2017: £3.5m • April 2018: £3.5m
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Cash flow
2014 (£m)
2013 (£m)
Cash generated from operations 11.7 10.1
Net interest paid (0.4) (0.4)
Income taxes paid (0.7) (2.1)
Acquisition of capital assets (9.7) (4.5)
Acquisition of businesses (2.3) (0.4)
Cash inflow before financing activities (1.4) 2.7
Receipt of bank loans 2.1 5.3
Proceeds from issue of shares 0.3 0.5
Purchase of own shares - (1.0)
Dividends paid (4.9) (4.4)
(Decrease)/increase in cash in the year (3.9) 3.1
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Group Escrow
10
Revenue : £2.5m Headcount : 41 FTE
US
Revenue : £1.6m Headcount : 10 FTE
Europe
Revenue : £11.3m Headcount : 106 FTE
UK
Escrow Revenue £15.4m Contribution £8.9m Headcount 157 FTE
Group Escrow
11
Group Escrow • New Group MD appointed June 2014 • Progress continues with Domain Services/data escrow Escrow UK • Prices increased in 2014 • Verification performance growth continues - 8% increase • Terminations have reduced to 11% (2013: 12%)
2014 (£m)
2013 (£m)
Growth (%)
Escrow revenue 15.4 14.8 4%
Escrow UK revenue 11.3 10.8 5%
Escrow contribution 8.9 8.4 6%
Escrow renewals (FY 2015) 18.3 18.1 1%
Group Escrow
12
US & Europe Escrow • Dollar & Euro have had considerable impact • Revitalised sales teams delivering strong results • Solid performance from US team - more co-ordinated • Strong performance from Europe - new GM recruited • Co-ordinated global account management has improved
2014 (£m)
2013 (£m)
Growth (%)
Constant currency
(%) Escrow US revenue 2.5 2.4 7% 11%
Escrow Europe revenue 1.6 1.6 (5%) 2%
The security landscape
13
Group Assurance
14
Headcount : 30 FTE
Seattle
Headcount : 43 FTE
New York
Assurance Revenue £46.9m Contribution £7.7m Headcount 875 FTE
Headcount : 667 FTE
UK & Europe
Headcount : 17 FTE
Austin
Headcount : 88 FTE
Headcount : 9 FTE
Rest of world
Headcount : 21 FTE
Chicago San Francisco
Group Assurance
15
Group Assurance • Globally joined up services - compelling, competitive advantage • Margin improved to 17% (2013: 16%) - target still 20% • European recruitment opportunities in Spain • Globally recognised reputation for responsible, credible research • Continued staff development, recruitment & retention remains primary focus
2014 (£m)
2013 (£m)
Growth (%)
Assurance revenue 46.9 39.2 20%
Assurance contribution 7.7 6.3 23%
Group Assurance
16
Security Consulting • Largest part of the Group in revenue & headcount • US & UK are working effectively for international clients • Over 380 security consultants • Retention & recruitment remains strong > 90% • 32% growth in UK & Europe • 35% growth in US - 41% on a constant currency basis
2014 (£m)
2013 (£m)
Growth (%)
Constant currency
(%) Security Consulting 36.1 27.2 33% 35%
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Software Testing & Web Performance • Strong new business & renewal rates - 91% • Renewals growing to £6.8m (2013: £6.8m) • New products in development continue to enhance service • Relinquished low margin contracts during the year - management drain
2014 (£m)
2013 (£m)
Growth (%)
Constant Currency
(%) Software Testing & Web Performance 10.8 12.0 (10%) (10%)
Group Assurance
Domain Services
• Fast growing & extremely dynamic market • Corporates are looking for a secure
end to end solution • Need a trusted provider to navigate the
new domain landscape • Require total brand protection
• Acquisition of Open Registry group of
companies fills gap in service provision: • Complete package of complementary
registry & registrar services • Wider geographical coverage • Considerable competitive advantage
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(Registry)
Domain Services
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Open Registry Acquisition • Registry, registrar & trademark validation services • Independent group of domain service companies • Highly respected ICANN & industry player • Complementary to .trust suite of services Open Registry S.A. – backend registry operator • Globally ranked #6 • Full suite of registry services - application consultancy, technical operations & post-launch
management CHIP – service provision - trademarks • Provides software, billing and support for Trademark Clearinghouse (TMCH) • Contracts directly with brand owners that submit trademark data to TMCH • TMCH provides a centralised database of over 33,000 verified trademarks - connected to every
new TLD Nexperteam – B2B Registrar • Managing over 8,000 domain names for large base of customers • Domain registrar services - domain name registration, name serving to email and web hosting
Domain Services
.trust • .trust purchase completed • Currently progressing through the orderly ICANN process • Satisfactory settlement reached for conclusion of .secure contention • .trust expected to be live end of February 2015 • Detailed discussions with over 30 organisations about joining .trust community • Opportunity for brands to buy in component stages
• Register .trust domain for a placeholder fee • Use unique security monitoring service for existing estate • Formulate domain strategy
• Development of continuous monitoring tool & interface will enhance managed service capability in Assurance
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Current trading & outlook
• Assurance • Security threat landscape continues to worsen • Scale & international reach continues to grow • Opportunities continue to increase
• Domain Services • Transformed & now well positioned to exploit market opportunities • .trust launched & first sites expected live this year
• Continued strong growth across Escrow division • Group orders & renewals of £57.2m (2013 at £51.4m)
• Group Escrow orders & recurring income of £20.6m (2013 at £20.8m) • Assurance orders & recurring revenues £36.6m (2013 at £30.6m)
• Confident about delivering another year of strong & consistent growth
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