3 Alternative Performance Measures (APMs) and adjusting items continued As discussed in the prior year Annual Report and in accordance with FRC guidelines, the Group no longer presents a Consolidated Income Statement showing adjusting items separately. In the prior year, the Group disclosed adjusting items of £10.2m relating to amortisation of acquisition intangibles (2020: £8.8m) and share-based payments (2020: £1.4m) as a separate column on the face of the Consolidated Income Statement. This is no longer disclosed in this way to simplify the Group’s results. However, as the Group manages internally its performance at an adjusted operating profit level (before amortisation of acquisition intangibles, share-based payments and Individually Significant Items), which management believes better represents the underlying trading of the business, this information is still disclosed as an APM within this Annual Report. This APM is reconciled to statutory operating profit, together with the consequently Adjusted basic EPS (before amortisation of acquisition intangibles, share-based payments and Individually Significant Items and tax effect thereon) to statutory basic EPS. This change has removed the following adjusted measures from the Group’s narrative reporting and disclosures: • Adjusted profit before taxation • Adjusted taxation Following this revision to APMs, the Group has the following APMs/non-statutory measures: • Adjusted EBITDA (reconciled below) • Adjusted operating profit (reconciled below) • Adjusted basic EPS (pence) (reconciled in Note 11) • Net cash/(debt) excluding lease liabilities (reconciled below) • Net debt (reconciled below) • Cash conversion (reconciled below) • Constant currency revenue These measures provide supplementary information that assists the user to understand the financial performance, position and trends of the Group. Further detail is included within the glossary of terms to this Annual Report which provides supplementary information that assists the user in understanding theses APMs/non-statutory measures. The Group reports certain geographic regions on a constant currency basis to reflect the underlying performance taking into account constant foreign exchange rates year on year. This involves translating comparative numbers to current year rates for comparability to enable a growth factor to be calculated. In addition, the Group also reports these regions on a local currency basis to demonstrate the revenue performance on a local basis. As these measures are not statutory revenue numbers, management consider these to be APMs. Adjusted EBITDA and Adjusted operating profit The calculation of Adjusted EBITDA and Adjusted operating profit is set out below:
2020 (restated) 2 £m
2021 £m
Operating profit
17.3
12.6
4.4 5.9 6.4 3.0
Depreciation of property, plant and equipment
5.8 6.0 8.8 3.0 7.9 1.4
Depreciation of right-of-use assets
Amortisation of customer contracts and relationships (acquired intangibles)
Amortisation of software and development costs Individually Significant Items (Note 5) Share-based payments charge (Note 26)
12.7
2.8
Adjusted EBITDA
52.5
45.5
(13.3)
Depreciation and amortisation (excluding amortisation charged on acquired intangibles)
(14.8)
Adjusted operating profit
39.2
30.7
NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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