Chair’s statement
Securing the future
As at year end, net cash (excluding lease liabilities 2 ) amounted to £83.3m including net placing proceeds of £70.2m; adjusting for this has meant that underlying cash amounted to £12.6m compared to net debt of £4.2m 12 months ago. It is also worth noting that we have taken no government subsidies or loans (other than deferring tax payments that have now been fully repaid), nor have we made any colleagues redundant or furloughed them during the pandemic, demonstrating our objective of being a global hub for cyber talent. In Assurance, the North American and EU Assurance businesses grew by 6.5% and 5.9% respectively on a local currency basis. Our UK and APAC business increased 3.9%, supported by growth in MDR and the launch of our Remediation service. Our Global Software Resilience business declined by 2.4%, a result of execution challenges in a remote environment and capacity challenges in sales resourcing. However, we are proud to see that our cloud proposition (EaaS) continues to go from strength to strength, with orders having increased by 83% to £2.2m, providing a promising and exciting platform for the future.
Chris Stone Non-Executive Chair
Our business performance can be found in more detail on pages 9 to 13
Strategy and sustainable business model Our strategy, mission and vision remain unchanged, and continue to drive progress towards our medium-term objectives: • For our shareholders: • Double-digit revenue growth and margin improvement for Assurance • Return Software Resilience to sustainable growth • Disciplined cash generation • For our customers: • Use our unique data, capability and insight to help customers to meet their cyber resilience needs • For our people: • A global hub for cyber talent • An inclusive environment where everyone feels safe to be authentic and which is representative of the diversity of the world in which we live NCC Group’s research-driven, people-centric and capex-light business model enables us to remain at the forefront of the dynamic cyber industry.
Introduction At the end of a financial year which has seen continued disruption to economies and trading environments worldwide, it is pleasing to be able to report to all our stakeholders that NCC Group has continued to demonstrate its resilience in many ways. In particular, NCC Group has achieved year on year revenue growth and profitability despite the headwinds of a global pandemic. Along the way, we secured the Group’s largest acquisition to date, enjoyed strong growth in our most exciting propositions for the future and, had another year of strong cash management. Business performance Overall, the Group delivered revenue growth of 2.6% (2020: 5.2%), Adjusted EBITDA 2 of £52.5m (2020: £45.5m) and Adjusted operating profit 2 of £39.2m (2020: restated £30.7m 3 ). On a statutory basis, after the partial recognition of acquisition costs of £7.6m and cloud configuration and customisation costs associated with the Group’s transformation programme SGT (£5.1m, 2020: restated £7.9m 3 ), operating profit increased by 37% to £17.3m (2020: restated £12.6m 3 ) and profit before taxation increased 54% to £14.8m giving rise to a statutory EPS of 3.6p (2020: restated 2.3p 3 ) and Adjusted basic EPS 2 of 9.5p (2020: restated 7.2p 2 ) respectively. The Group delivered sustainable cash flows with cash conversion 2 of 88.2%, resulting in the Group becoming cash positive in November 2020 prior to the equity funding process for the IPM business US acquisition. Our colleagues have continued to show their commitment and resilience throughout the pandemic in delivering excellent service to our customers and pursuing our mission, vision and objectives relentlessly.
Further details on our strategy and value creation through our business model are provided on pages 29 to 31 and 20 and 21 respectively
During the year, we agreed the acquisition and associated funding for Intellectual Property Management (IPM), the Software Resilience division of Iron Mountain, and received shareholder approval on 1 June. It was therefore pleasing post year end that we completed the transaction, which will be accretive to profitability and provide further strong cash generation. It is also pleasing that the management team has commenced the integration programme, and this is on plan. The strength and flexibility of our Balance Sheet will allow us to pursue further organic and inorganic growth opportunities where they align with our strategic and financial objectives.
Further details on our recent acquisition are provided on page 12
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NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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