Shearwater Group (LSE:SWG) — Investor Presentation

0:01 Good morning, and welcome to the SHEARWATER GROUP PLC investor presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. Have the company come review all the questions submitted today and publish responses as is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Phil Higgins. Good morning to you, sir.

0:30 Thank you, Ed. Thank you, and good morning, everyone, and welcome to this year's end of year presentation. Let's dive straight in. I'm gonna give you just a little bit of an overview of of SHEARWATER for those that are unfamiliar with the company. SHEARWATER is a cybersecurity company. We produce software, and we also sell solutions to our corporate client base and managed services and professional advisory. We have two divisions inside our group. We have a software company, Secure Envoy. There they sell and manufacture secure authentication. This is a must have technology. And every time you log onto your PC or your phone, you're authenticating.

1:17 And, typically, you'll be delivering your your email and your your password and or your passcode to gain access. That's authentication. And Secure Envoy have been in the business now for, in excess of twenty years to foundation partner of of the technology. And they have two queens awards and won numerous technology awards, in addition to that. On the other side of business, we have our services business, where and Pentest, exist. And there we have, with Pentest, they sell, they they act as bad people trying to hack your network. And they they won numerous awards on the global stage for hacking. And most recently, they won the home to own in Toronto where they hacked the s the Samsung s 23 phone in less than a minute. These guys are world class, and, they're, our our leading pen testing company.

2:16 Brookhawk. At Brookhawk, we sell, our advanced, cybersecurity solutions, threat feeds. So we deliver information to corporate clients who are interested to know what the dark web is saying about them, if their data or or if there's any breaches inside their networks, and they're also looking for bad behavior inside their networks. So we get involved with some high level, nonstandard technology, so we say, that, that deliver those types of solutions. And our group, currently, when you combine their activities, we're we're covering certain 50 countries globally. And through our software division, we have a two tier distribution model, and we sell through 350 plus resets. And that's rather unique in that it gives us a low cost of activity in working and and managing a handful of distributors, and they have the cost of managing the 350 plus resellers around the world.

3:16 On our services side of the business, we actually sell directly to corporate clients. Moving on. Just a little bit about the our our positioning. We believe we've got strong positioning. When you look in the media, the cybersecurity, is is a constant headline. We're seeing breaches constantly. We're seeing data being lost and stolen. And importantly, we're seeing the regulators and government agencies actually increasing the demand on businesses for managing or better managing our personal data. There's more regulatory compliance. There's more legal requirement to do so. So we've got a very strong marketplace, which we're moving into. We also as these regulations and the the regulate as the government laws actually change, we do see, our client base augmenting as well as they're trying to keep up with technology as it moves, and shares from a an on premise to a in cloud to a hybrid cloud to a private cloud, all these different methods of, of activity. And now with the introduction of of AI based solutions, what we're seeing is a a real mixture, of the way corporates take their business to market through digital means.

4:34 And because of that, we take our solutions to to meet those demands for our clients. We work with large corporate global entities. You know the brand names. They're on TV, and they range from from multiple banks to telcos to retail outlets and and now government departments. And what we have seen is, obviously, an an interest and increase activity in AI based solutions. We've been delivering those now for a number of years, and it's now it's becoming a popular headline in the press. Also, on top of that, we've been obviously evolving our own product set and our own services. We in our service division, we deal with a large amount of top corporate blue chip customers. We are and have been developing technologies to to actually come down a layer and start talking with the the smaller entities as well to try and get and collect some of that mass market as it were.

5:34 We're using a enterprise grade technology. We've cut up in small pieces, and we're now selling that in through to the smaller client base. Also with our offerings, we've we've made our efficiencies a little bit better by our consulting company into Brookhall. And in the software side, we've brought Geolang into our secure endpoint. That's streamlined our product offerings. It's also allowed our asset software, test teams to consolidate and be more focused, and that's delivered us a a more agile business at the end of the day. And most importantly, none of this works without the client base. We've got a who's who of clients, and we're very pleased with and serving them for many years. Some of our clients we've had for north of ten years, and they range from high street banks to to multiple telcos to to to the retails.

6:32 And the types of technologies that we sell to these people do tend to attract multiple year contracts. We do see these contracts renewing and more repeating themselves. When the technology advances itself, we do then find that that we'll be replacing that technology with a with a more advanced solution. Moving on. Adam will come over will will deliver a more detailed representation of the numbers later on. But just to give you the highlights, revenue was down this year and 22,600,000 and certainly 15%. But more importantly, an improved adjusted EBITDA up from a a 200,000 lost last year to a in fiscal twenty three to a point nine profit this year, which we're we're very pleased of.

7:24 The reason for we've seen some of that is obviously and we'll go into more detail later on, but we we did suffer a a FX situation last year, which obviously we're we've now seen some hedged out, so we don't have that problem moving forward. But we've also seen some improvements in, obviously, our own internal efficiencies at cost base and also an improvement in margin on the on the business that we actually sell. And another great point is our net cash, 5,000,000 up from fiscal twenty three. I'm very pleased with that. I mean, you look at it, it represents about 50% of our of our market cap. So we're doing well with that. We will probably follow the same cash cycles as we did last year. And but need to say, it's we are cash generative.

8:12 And adjusted loss before tax. There's been an improvement there in terms of those losses have reduced. As I mentioned earlier on, we've customer engagement levels, we we deal with large corporates. We do see a lot of repeat business coming through, and I'm glad to say that well, we've had delayed business in the past. We've now started to see some of that release itself as budgets become more available. We are seeing those larger projects come available to us as well. That's in front of, obviously, you know, we've we've worked with a very challenging market over the last two years. And so it's very pleasing to see that, you know, we're seeing some of that release. I mentioned earlier on that we about the integration of group companies.

8:59 Adam will be maybe I can give you some numbers later on as to some whether some of those savings sit. But needless to say, we have seen a very smooth integration. That's now complete, and we finished that off, you know, just before Christmas last year. So we also we've been making some announcements with with our RNSs, and we've obviously announced some some notable wins out there. And we are, as you know, h two heavy, and we do have a consolidation of business in in q four. It's always very difficult to to give you renewals notices in q four. Some of those deals take takes right to the wire. And I'm glad glad to say that we did start off q one with a with a healthy order book, which is very good.

9:51 And also moving on to our software division and their offering. We did mention last year in the interims that the our software development is is is is now, so to say, delivering us a product set, which what we believe addresses the marketplace more effectively. A lot of our competition are very much delivering a SaaS based offering. There's not much on prem, and what we have been doing is maintaining our r and d in our on premise technology as well as our SaaS offering as well. And we'll come more into that later on in the day. And also importantly, we've won five awards, which adds to our collection of, of customer service innovation, and various competition wins that we've we've been part of.

10:45 Moving on. To give you a little bit of covering around our services, obviously, we're striving to be the partner of choice. And we are in a in a market space, which is obviously driven by large corporate consumer companies. And you over the last couple of years, we did see some of those projects slow down due to the COVID, the working from home. They they they they affected them, our customers. They also affected, obviously, the decision making process, which has delayed some of those orders. And but what we are seeing now is then those coming through. And services represent 89% of our revenue, so it's a it's an important part. And just to break down some of those revenues for you, where we've sold a a cyber desk or a, a data protection solution or even a pen testing project, We do see some of those components being being renewed year after year after year. We do see a number of multiple year contracts.

11:46 On our pen testing vision, we do see, customers, depositing, large orders for call off, and they roll year after year after year. And so on that repeat, the renewal business is at 53%. It's very important to see that, these are large corporates which are coming back

12:05 to us time and time again. They see us as trusted cost trusted supplier. They, we deliver high valued resources, high valued service, and, at competitive price. And it's a very competitive world. And, I'm glad to say that that number is, you know, is an important one to watch. Also, on the other side, we've got new contracts from existing customers. So what that is is where we sold a a contract to a to a leading bank, and then we that contract's finished, expired, and that customer comes back and would either re replaces that technology or they are they are renewing And we also see that, you know, new customers where we've sold them one technology, we then invite in our sister companies where we can to expand their position. We also expand our own solutions.

12:59 So if we're looking after someone's email security, if that's the first project win, then we'd be looking to try and look after their database management and their packet monitoring, their North South security management, and their bread fallen forensic behavior management across the East West side of the network. So we we look to sell on one component, and then we look to expand as much as we possibly can. We've got heavily incentivized teams to do this. We have an incentivized package across the business to allow the corporation between the the service companies. Couple of other things which are actually driving our revenues as well. And we've actually been selling some, AI offerings now for a number of years, and, we have been, we're seeing a a you know, a lot of our manufacturing partners now are all bringing to to the market an AI based offerings.

13:54 So you will see this figuring, featuring more in our presentations moving forward. It will start to show up, I imagine, in our RNSs where the types of technologies and the solutions we're selling, will have an an AI AI based what is that? We do have a heavy AI based offering, which will which will increase. And what we are seeing is obviously as as as the world starts to embrace this, we will be also using AI internally within our organization, but we'll be using it in the in the in the private environment. We won't be going public with it. Pentest, they had a very successful year, and they've had an unprecedented amount of new tests completed.

14:44 And we're very pleased to see that that consulting engagement once we've sold all this technology, you need pen testing thereafter to actually test it each year to make sure it it work and it's still resilient. So you can sort of see why on the services side, Brookhort with its, high value, service offerings and its solution offerings is complemented by having a pen test there where they can come in behind that client base and actually test these these solutions at at a chargeable fit. Moving on to the software division. So just wanna take a couple of moments just to explain what our software is. So Secure Envoy, it's a well established twenty year old company. They've won two queens awards, numerous quality awards, and accreditations.

15:32 And they they focus predominantly in these the access management. So they have been they started off with a with two factor authentication, which is your password and and your email address. And then the the market's evolved, and we've evolved with it. And now it's a multifactor. It's now using token and token list. You now get the opportunity to you know, to log in via phone through facial recognition, and lots of different opportunities are available now in in

16:06 in access. So we all use it every day when we log on to our computers. We have to authenticate. That's exactly what this is. So everyone on the planet is using this. A lot of our competition out there would be they the market seems to be dominated by cloud based or SaaS based, security as a service, that type of activity. Well, we have also got that, but we've also, you know, maintained the development on their on premise. And the reason we've done that is we have seen a a resurgence, a keen interest from government for not using cloud services but wanting their services on premise. The the threats and the types of establishments they are, They they're looking for non premise.

16:53 So we are seeing an interest from government in that space alone. We are also seeing some of the the cloud services. Some of those are coming back to on premise. So once again, we're seeing, you know, a new emerging market for that. It probably won't gonna take over, but it will be a marketplace where we can actually deliver both. So we can deliver more for a corporate client than, say, some of the other organizations where they are cloud only. We also mentioned that the the Geoland company we we merged in. And the reason we did that was a number of reasons. First of all, they it's it's a small company, and they didn't have the brand name or the the the positioning of Secure and their 350 plus research.

17:41 So it made perfect sense to bring them together. And so that we don't confuse the market, it is it made perfect sense to to to drop the name Geolang in favor of Secure Envoy's brand. We with the teams themselves, they've we've we've maintained the teams. We've brought them together, and they're all under one management. So that's what we do there. What we what the technology actually does, it it looks for data inside your your data stack with inside your databases, your your emails, and and so forth. Data that should be protected should be could be private information, and it searches for that data. And this is becoming a compliance requirement where all organizations have to manage their their data position, and they're heavily fined if not. So GDPR is a big driver in all of this.

18:33 And also good governance of making sure your data is stored correctly and and secure invoice data discovery delivers that. So they sit in that space, and it goes hand in hand with with access management, accessing your data, and the data discovery in discovering that data. So, you know, you can sort of see why those tend to make good sense to be come together. Back in October, we also announced the recent version three. In that period, we also spoke about the MSSP offering. This allows MSPs to white label so they can now sell our product as their own with their own label on it. So we've expanded the marketplace for that. We've expanded the technology, so it's on prem and in cloud being developed.

19:22 And we obviously moving forward, we will continue to release. I won't forecast to say that we're gonna be releasing twice a year, and we have just done a a feature release in May, and then there may be another one later on in this fiscal year.

19:40 I'm gonna keep quiet for a while, and I'm gonna pass over to Adam who's gonna give you an overview of our financials. Over to you, Adam. Thank you, Phil. Just check you can hear me, Phil? I can indeed. Thank you. Very good. Good morning, everybody. And I'll walk you through the main financial headlines for our March 24 full year results and, obviously, happy to take questions at the end. So firstly, as you've heard from Phil, our revenue at £22,600,000 was 15% below the equivalent number in the previous year with lower revenue in both the services business and also the software division, and I'll come to those separately in a moment. So looking first at the left hand table, which is the reported numbers in the accounts, headline gross profits improved to £6,900,000 with margin at 31% compared to 24% last year.

20:35 This table is actually slightly distorted due to the services division where we have had to mark to market our forward exchange contracts within admin costs. So I've also shown the table on the right hand side, which nets these up in gross profits to show a a more more consistent consistent year on year position. And if anyone has any questions on this because it's quite technical, I'd be happy to explain it further in the q and a. But on this basis, you can see a more noticeable improvement in gross profit by percent in absolute terms and a 9% increase in the margin percentage. As a reminder, the prior year numbers do include a naught £800,000 foreign exchange loss within gross profit, and the above table doesn't remove that. But if did, it did, the gross margin last year the percentage last year would have been 27%.

21:24 So even on a more level playing field, it's still clear that our gross margins improved during the year, and I'll explain that in more detail when we look at the divisional numbers in a moment. Underlying admin expenses reduced slightly year on year despite some cost increases, and this line contains a small element of the net cost savings from the restructuring during the year with the remainder included in the cost of sales line, so within gross profit. So consequently, adjusted EBITDA was naught £900,000, which was naught 300,000 ahead of last year after excluding the naught 800,000 FX loss.

22:01 So moving on to the divisions, I'll start on the left of the page with services, which, to remind you, comprises Brook Court, Pentest, and the now integrated Xena business. As explained by Phil, revenue was down 15% as Broadcourt continued to suffer from budgetary delays in some of our larger customers. However, there has been an improvement in the gross margin percentage due to a combination of the improved profile of contracts in Broadcourt and a strong year in Pentest. Admin expenses were lower than last year, mainly due to the cost savings achieved as part of the restructuring.

22:37 So consequently, adjusted EBITDA was £1,500,000, well ahead of last year, even when adjusting that figure for the one off naught £800,000 FX loss.

22:48 Moving across to the software division on the right hand side. While the headline revenue figure shows a 17% full year on year, it is important to note the early signs of encouragement that after declining annually in recent years, revenue in the second half of f y twenty four was similar both to the first half of the year and also the second half of last year. And this has been largely achieved through improved renewal rates, particularly as existing customers have been reassured by the company's future road map and continued investments in the product suite. There has also been good growth in inbound inquiries in recent months. And combined with the recent release of an upgraded on prem version of secure invoice access management software and also a strengthening of the marketing department, the building blocks are being established to return the division to growth.

23:39 The gross margin percentage increased largely as cost savings earlier in the year were fully realized in the second half, while admin expenses were similar to last year. So moving back to the rest of the income statement. Overall, the adjusted EBITDA at naught £900,000 in also includes 1,400,000 of central costs, which was slightly higher than last year, although the exit run rate is now lower from due to the cost savings that are being realized. Adjusted loss before tax reduced from £1,300,000 to naught 600,000, with the improvements in EBITDA partly offset by an increase in amortization as previously developed software starts to come online.

24:24 Before tax was £3,300,000, down from 9,600,000 last year due to the absence of of an impairment charge. Exceptional items were higher due mainly to cost of the restructuring and also a one off abortive corporate project in the second half. Tax remains a credit due mainly to tax losses and also the impact of relief on r and d expenditure. So the reported loss after tax was £2,200,000, which significantly reduced the reported EPS loss to 9 point 0.11p compared to 34 point sorry. 34p loss last year. However, adjusted EPS has edged back into positive territory at naught 0.3p per share compared to a naught 0.4p loss last year.

25:11 So finally, moving on to the cash flow. And, again, no real surprises here. Our closing cash balance of £5,000,000 was a million pounds better than last year, as Phil highlighted earlier. And that was mainly due to the expected working capital inflow in the second half of the year. And we expect a similar profile in the new f y twenty five financial year. CapEx was slightly lower than last year as some third party software development activity was brought in house. And as I flagged at the half year, the tax inflow in 2024 represented reimbursement of tax paid in 2023 following finalization of the previous year's tax computations. So So that's all from me, and I'll hand back to Phil to close out the presentation.

26:05 Thank you, Helen. Right. Just another couple of slides here before q and a.

26:11 So strategic direction. Obviously, we we want to become the partner of choice. We we we nothing's changed there. We're we're governed by some four key pillars. And what I want to really draw upon at the moment is the the organic growth. Obviously, you know, the the state of the market's been been difficult over the last couple of years. And, obviously, what we're looking to do is actually rebuild those revenue streams and get back to what we would consider more of a normal growth pattern. So our in our interest at the moment and our focus has been very much on that organic growth. And we're gonna be doing that obviously by continuing with the cross fertilization of our our business inside the the services sector and, obviously, incentivizing sales teams to continuously, you know, market the our software businesses and and to sell that solution.

27:06 And, you know, we're we're gonna be helped through, obviously, the the evolving market space and, obviously, the introduction of of AI based technologies from our our vendor partners. And, obviously, as we offer that through to our our corporate clients, we're we're expecting to see a a bigger uptake of that in the coming years. The delayed projects are coming through. I'm pleased to report, and we will start to see those hopefully in in our in the future. You know, we are you know, as a business, what we are are there to do, we're actually there to actually try and help not just our client base, but also internally. And and what we actually delivered by our custom to our our own staff is a obviously, we we we try and deliver actually deliver them an environment where they're incentivized to actually go out and and and deliver what we need to deliver. And but for the companies themselves, you know, it's important that we maintain our our expenditure in r and d. It's important that we we provide the services, the corporate services for for our business to actually thrive and and develop.

28:18 And it's also very important, obviously, to to secure new businesses. So, you know, there will be a increase in marketing activity, an increase in marketing funding. There are additional resources being brought into that space to help develop it. So what we are looking for this year is very much a return to profitable growth, and we're very excited by this year. But it's still just to touch on our long term strategic goal is obviously to to get back into acquisitions. But until then, it'll be very much supporting that organic position. The outlook. We've covered a few of these points in already.

29:03 And but just to to recap on a few of them. The as I mentioned, the those customer budgets are starting to release, and then we we have seen some large scale projects come available to us. We have announced some of those. And just to give you a little bit of color on on those, that 1,400,000 that that landed, I believe, in the very early part of April. We missed last year where we was hoping that one to fall in. Sometimes that happens. It's the customer budget period dictates when and when and how they they place these orders. Because of the size of the deals that we get involved with, they it's very difficult to actually, you know, demand orders when we want them. It's it's at the the the of the business and the client. But what we do try and actually report to you is obviously those large scale opportunities.

29:55 The run rate business below all of that happens daily, monthly, and the guys are delivering all of that. No problems at all. But we do try to bring together those those bigger, more interesting ones for you. Some of those contracts, 1,400,000 renew, what that is, that's a mixture of we're actually delivering a a cyber fabric for for a a telecoms and media company. There's many telecoms and media companies, and I know people always pick on one. There's several of them, and and we deal with a number of them and mention their names. This particular one was very interested in protecting their their data at rest and in transit. And so they've we they bought a solution from us. And we also manage that solution. We got resources on-site that actually deliver that.

30:43 And very recently, they just acquired another solution for that 4,800,000. And that's three year deal, that one. The 1.4 is a one year deal renewable. Hopefully, then that will renew again next year. The 7.2 sorry. The 720,000 deal, that is a for global financial institution. That's a retail bank. You'd know the name. And what they this is part of a project that we've already started, and it was delayed during COVID. And we're seeing, obviously, the the speed now starting to ramp up. This was a a an extension. They've expanded. And so we're obviously very pleased to see that happening, and we we do expect more opportunities in this space with this customer to continue throughout throughout the year.

31:38 And also the government departments, that's that's a big one for us. We as I mentioned, we we've we've won a rather sizable significant contract there during the period, and we've now and we submitted a proposals for g cloud 14. The government will announce those in September, October, and hopefully, we'll be on that list. We've been benefiting from g cloud 13, and we've been selling cyber and threat feeds to the government. So these are big government departments. So it's very important now that organizations like that are getting involved and buying these products and services. It it means the government's got great confidence in the technology, and we can amplify that when we talk to our our corporate client base.

32:29 So we've got we spoke about streamlining operations. We've we've done that. We're very pleased with that. It strengthened our our position. It's making us leaner, and we're still sort of sort of 90 staff inside the organization. But we believe that we got them a good 90 staff, the right 90 staff. And there are opportunities this year where we have headcount room for growth, and we'll be applying additional salespeople inside the business to help meet some of that future growth. So opportunities remain. We are obviously gonna continue, you know, working with our long established blue chip clients, but I'm glad to say we've we've now been receiving RFPs and and so forth to beginning involved with new blue chip clients as well.

33:14 So we we're very pleased to to be involved with with that type of activity. And it's very important because because of the type of technologies we sell, because they're top shelf and they're specialized, there's not many people in that space that do what we do. We do see a lot of repeat business. So when we see that that new client coming in, they buy the contract for the first year, you know, there's a high likelihood, good chance that they will repeat that. So seeing those new clients come in is is very reassuring to us. As I mentioned, we're focus on the lack of organic growth in the near term, but I'm glad to say that organic growth and so far, we're achieving management expectations in terms of so where our position is so so far in the year.

34:02 And, obviously, we're looking forward very much into the the remainder of h one and into h two. And with that, I think that probably covers all the key points today. So with that, I'd like to hand back to the Alexandra for Q and A. Perfect. Bill, Adam, thank you very much for presentation. Ladies and gentlemen, please continue to submit your questions just by using the Q and A tab, is situated on the top right hand corner of your screen. We have received questions today, and and I want to start the q and a session off with this one here, which reads as follows. You mentioned notable contract wins and services. Can you give more detail on length of contracts? And have you secured any other contracts and services other than services? I can. Obviously, I can't mention customer names. I can't mention necessarily the the technology detail itself, but what I can say is that the ones that I had on the previous slide, the the 1,400,000, as I say, that is a that's a mixture, a blend of of a solution that, that protects data, which is compliance requirements, a legal requirement for the corporation.

35:11 It would be devastating if that data leaked out. So they don't have the resources themselves. So they actually came to us to actually not only deliver the solution, also manage the solution. We that particular deal was a one year deal, but we have been renewing that deal. And this is the the second time it's it's a renewal, so we've we've we've done it already. So we will be looking to to obviously continue that. And we do have large framework agreements in place with a with a number of our large corporates. And below that framework, we have numbers at at at quite a few multiple year deals on key strategic technologies. For one of our banking customers, we have been working on, various levels of of, email security, email gateway security.

36:01 They're a global bank, and they need to ensure that their communications are robust and strong and and highly secure. And, you know, when you're dealing at that level, those some of those projects do take a long time to roll out. They're international. So those contracts do tend to get written for multiple years, and that particular one is a is a three year deal. But that's part of a program that's already two years in existence, and we expect to see once the whole program is rolled out, we'd like to see, imagine there'll be a consolidation possibly of of that that solution, and we will probably see renewal of that. That's what we're I'd like to expect. So we do get a mixture. We do try and get some annualized billing if possible, but we're at the the guidance of our of our clients on how their their budgets are spent. And and sometimes that means that there's some quite lumpy projects that we get. And I'm glad to say we do get a good blend of one year, three year, and and in some instances, four and five year contracts.

37:10 Hopefully, that answers your question. Thank you very much, Phil. Moving on to the next question. Can you tell us more about the reorganization of the business and the benefits it's delivered this year? I can. Maybe I can do the a little bit about the the structure, and maybe Adam can add a little bit of color on some of those savings from a financial perspective. First of all, we we had two different teams in our software division doing doing separate things, and we weren't that effective. It wasn't the use of times was wasn't effective as it could be. Bringing that together allowed the management to have a clearer agenda, an easier time of of management and product development. And by doing that, it allowed us to focus our time and energy on product development by releasing, obviously, some of that that that burden of duplication.

38:08 Adam, can you give any details on the numbers with that one? Yeah. So just to remind everybody, think we we said last year and reminded everybody at the half year, we we were targeting about a million pounds worth of savings. So pleased to report that those have been achieved. Within the year, we realized about point seven about 700,000 of those, and that was split between you know, I I pulled out most of it in the in in my presentation, but some admin cost savings in the services division, some gross some cost of sales savings in the in the software division and and some savings in in in our central costs. So that's, as I say, around point seven delivered in the year with with the rest obviously coming through as as as it annualizes into FY '25.

38:58 So, hopefully, that that that covers that that covers where where all the numbers sit. Also, it's worth noting, obviously, Exena coming into Brookhall, it get it able enabled them to actually get closer to our client base at Brookhort. So teams are working close together. We're seeing opportunities increase there, and that's working very well. But as I mentioned, those some of those savings, I'd say, allows us to refocus into providing additional feature rich activities around our software portfolio. That's great. Just moving on to the next question. With the developments made in software, what sets you apart from your competitors that aids the customers' buying decision? I think I mentioned it before.

39:44 I mean, we've a lot of our a lot of the competition out there do seem to be focusing their their time and energies on building out cloud only or SaaS based solutions. And so they can address a a large proportion of the marketplace, but not everyone's gone into the cloud. And we're seeing, as I mentioned, the the the government are very interested in our on premise service. So we've been developing and and funding r and d into that space to allow the, you know, to continue to develop our own kind of service. So, you know, our differentiator is that we we cover both ends. We do on prem and we do cloud, private cloud. We also have an MSP where you can actually white label it. And and you can't do that with lots of the others. And so if you're in a large corporate, we do present an alternative choice for you, which is gives gives you more opportunities to to secure more of your asset.

40:45 Thank you. Expansion in government departments remains a key strategic priority. What are the main challenges and opportunities that you've seen in this sector? Historically, the challenges have always been the time it takes and the energy it takes to actually get involved with the government. And when you're trying to sell, you know, advanced cyber solutions, it's it's very difficult. Also, from consulting perspective, the government don't want to pay, you know, top dollar for the for the best consulting, you know, pen testers and and advisers. They they they tend to have a a cheaper day rate. So we obviously were chasing always the the the more profitable business. And recently, what we have seen is a government switch to what you're looking for and acquiring some of the technologies that we sell, which obviously do present great opportunities for us.

41:41 So, you know, we have invested over the the last sort of nine months, twelve months time in in filling out and completing the applications for g cloud 14, which is the government's sort of tendering portal. And we're on g cloud 13. We have benefited from that. We've now focused more time and energy. We some of our resources that we've bought into the company, have got, familiar with, selling into the government. So, that's gonna be a key focus for us moving forward, and we'd like to think that we can pick up on some of those larger contracts as we did, last year and around about September time. Perfect. Thank you very much. The next question has two parts. The first part is, what are the main technologies used by SHEARWATER GROUP PLC?

42:28 And the second, can you provide examples of recent innovations or new products? Well, when I say the what are the main technologies of SHEARWATER, that's a difficult one. I mean, we we from our services division, the technologies that we use internally, we we we are looking up because we're selling technologies, you know, AI based technologies. So we're we're we're using those ourselves, And these technologies are they prevent ransomware attacks. They prevent hackers from getting in. They they highly you can manage them to to a an end degree where we can actually, you know, monitor all the traffic going through our network.

43:20 These are the same solutions that we actually sell through to our our client base. The the names of these, you may or may not know. We use things like Deep Instinct. We use things like Proofpoint. We use domain tools. And these are all sorts of technologies which and some of them will will overlap in what they deliver. We have a multi holistic approach to security internally. We're heavily governed by compliance. So you can appreciate and parts of our business also got ISO 27,001 security. So we do each of the businesses are multilayered in terms of their security approach. They also we have centralized tools, which we we we deliver as well.

44:08 And we we keep on top of that, and we keep adding to that layer to make sure that we can be as robust and secure as we possibly can be. There's never any guarantees. We do also have procedures and policies in place to make sure that in the event of anything that we're well governed and we know exactly what we do. We're we're well trained in that. And but, yeah, it's a we we do have a lot of our a lot of technologies that we sell to our customers, we actually use ourselves. Perfect. Well, Adam, thank you very much for answering those questions you can from investors. We have received some admin related questions, and these and any other questions can be reviewed by the company, and we'll publish those on the investor meet company platform. But just before we direct investors, provide you their feedback, which are particularly important to the company, Phil, could I just ask you for a few closing comments?

45:00 Certainly. Today, you've heard from us and we've been talking about obviously the robustness and of our business. It's been a tough couple of years. We've been we sell resilience. We we are resilient. And we've whilst our revenues were down, our adjusted EBITDA is up. And and I always consider that the important number. The what you have heard today is obviously, hopefully, the the confidence from our teams has come through in this presentation. Hopefully, you've that in the numbers. We are very confident about the year ahead, which is a a welcome relief, to be honest with you. We've been using the phrase historically about cautiously confident, and we're now seeing the opportunities come back to the marketplace. And I'd like to think that we will have every opportunity to grow further and return to a a good stable position.

46:00 And then with that, I'd like to thank you for your time. Perfect, Phil, Adam. Thank you once again for updating investors today. Could I please ask investors not to close this session? As you know, I'll be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This won't take a few moments to complete, but I'm sure we're greatly valued by the company. On behalf of the management team of SHEARWATER GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you.