Chief Financial Officer’s review continued
Financial summary continued Alternative Performance Measures (APMs)
Following this revision to APMs, the Group has the following APMs/ non-statutory measures: • Adjusted EBITDA (reconciled below and in Note 3) • Adjusted operating profit (reconciled below and in Note 3) • Adjusted basic EPS (pence) (reconciled in Note 10) • Net cash/(debt) excluding lease liabilities (reconciled in Note 3)
Throughout this Financial Review, certain APMs are presented. As discussed in the FY20 Annual Report and in accordance with FRC guidelines, the Group no longer presents a Consolidated Income Statement showing adjusting items separately. In prior periods, the Group disclosed adjusting items in 2020 of £10.2m relating to amortisation of acquired 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 Individually Significant Items, amortisation of acquired intangibles and share-based payments), which management believes better represents the underlying trading of the business, this information is still disclosed as an APM. This APM is reconciled to statutory operating profit, together with the consequently Adjusted basic EPS (before Individually Significant Items, amortisation of acquired intangibles, share-based payments and the 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
• Net cash/(debt) (reconciled in Note 3) • Cash conversion (reconciled in Note 3)
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 these Financial Statements that provide supplementary information that assists the user in understanding these APMs/non-statutory measures. The Group also 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 considers these to be APMs; see Note 3 for further details.
Divisional performance Divisional performance includes the allocation of certain central costs incurred on behalf of the divisions. Segmental information is disclosed below: 2021 2020 (restated) 3
Software Resilience £m
Central and head office £m
Software Resilience £m
Central and head office £m
Assurance £m
Group £m
Assurance £m
Group £m
Revenue
233.9
36.6
– 270.5 – (159.9) – 110.6 – 40.9%
226.2
37.5
–
263.7
(149.5)
(10.4)
Cost of sales
(149.3)
(10.0)
– (159.3)
Gross profit
84.4
26.2
76.9
27.5
–
104.4
36.1% 71.6%
Gross margin %
34.0% 73.3%
– 39.6%
General administrative expenses allocated
(45.4)
(9.5)
(3.2)
(58.1)
(43.9)
(10.0)
(5.0)
(58.9)
39.0
16.7
(3.2) (3.2)
52.5
Adjusted EBITDA 2
33.0
17.5
(5.0) (3.5) (8.5) (7.9) (8.8) (1.4)
45.5
(9.4)
(0.7)
(13.3)
Depreciation and amortisation
(10.7)
(0.6)
(14.8)
Adjusted operating profit 2, 3 Individually Significant Items Acquired intangible amortisation
29.6
16.0
(6.4)
39.2
22.3
16.9
30.7
– – –
– – –
(12.7)
(12.7)
– – –
– – –
(7.9) (8.8) (1.4)
(6.4) (2.8)
(6.4) (2.8)
Share-based payments
Operating profit
29.6
16.0
(28.3)
17.3
22.3
16.9
(26.6)
12.6
2 S ee Note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items. Further information is also contained within the Chief Financial Officer’s Review and the Glossary of terms on pages 187 and 188. 3 S ee Note 34 for an explanation of the prior year restatement recognised in relation to the adoption of the IFRIC agenda decision on cloud configuration and customisation costs in April 2021. The following additional information and reconciliation is noted in relation to Adjusted operating profit due to the adoption of the IFRIC agenda decision: 2021 £m 2020 £m Change
39.2
Adjusted operating profit (as noted above)
30.7
27.7%
(3.0)
Proforma amortisation charge in respect of certain cloud-based software arrangements (see explanation below)
(1.4)
(114.3%)
36.2
Adjusted operating profit less a proforma amortisation charge in respect of certain cloud-based software arrangements
29.3
23.5%
The proforma amortisation adjustment noted above represents an estimate of the amortisation that would have been recognised had the Group not changed its accounting policy in the current year following additional clarification on the accounting in relation to the configuration and customisation costs incurred in implementing Software-as-a-Service (SaaS) arrangements in the IFRIC agenda decision issued in April 2021. The proforma amortisation charge is estimated based on cloud configuration and customisation costs charged to the income statement in the year of £5.1m (2020: £7.9m). The Directors consider that Adjusted operating profit less a proforma amortisation charge in respect of certain cloud-based software arrangements is comparable to Adjusted operating profit previously reported.
34
NCC Group plc — Annual report and accounts for the year ended 31 May 2021
Made with FlippingBook Converter PDF to HTML5