Directors’ report
The Directors present their report
The Group is financed primarily by a £100m committed revolving credit facility that matures in June 2024. Under these banking arrangements, the Group can also request (seeking bank approval) an additional accordion facility to increase the total size of the revolving credit facility by up to £75m. This accordion facility has not been taken into account in the Group’s going concern assessment as it requires bank approval and is therefore uncommitted as at the date of approval of these Financial Statements. On 7 June 2021, the Group acquired the IPM business for $216.1m after a final positive net working capital adjustment of £3.9m to the original purchase price of $220m; the US acquisition was funded through an equity placing in May 2021 of £70.2m (net proceeds) combined with a new three year $70m term loan, existing cash balances and our existing revolving credit facility. During the year ended 31 May 2022, the Group incurred further cash transaction costs of £7.3m in relation to the acquisition. On 10 June 2022, $23.3m of the term loan was repaid, and $23.3m is to be repaid on 10 June 2023 and $23.4m on 10 June 2024. As of 31 May 2022, net debt (excluding lease liabilities) 1 amounted to £52.4m, which comprised cash of £73.2m, a drawn revolving credit facility of £71.0m and the term loan of £55.4m, with borrowings offset by arrangement fees of £0.8m. In relation to the drawn revolving credit facility, £20.4m is drawn down for working capital requirements and £50.6m in relation to the US acquisition of IPM. Headroom on the Group’s banking facilities amounts to £101.9m. In the year ended 31 May 2022, the Group has not taken any of the UK government’s Covid-19 Corporate Financing Facility (CCFF) or any other forms of government support worldwide as a result of the Covid-19 pandemic. The Group’s day-to-day working capital requirements are met through existing cash resources, the revolving credit facility and receipts from its continuing business activities. The Group is required to comply with the same financial covenants on both banking facilities for leverage (net debt to Adjusted EBITDA 1 ) and interest cover (Adjusted EBITDA 1 to interest charge) that are tested bi-annually on 31 May and 30 November each year. As of 31 May 2022, leverage 1 amounted to 0.9x (2021: (1.8x) as cash positive prior to the acquisition) and net interest cover 1 amounted to 23.4x (2021: 35.0x) compared to a maximum of 3.0x and a minimum of 3.5x respectively. The terms and ratios are specifically defined in the Group’s banking documents (in line with
The Directors present their report and the Group and Company Financial Statements of NCC Group plc (the ‘Company’) and its subsidiaries (together the ‘Group’) for the financial year ended 31 May 2022. Principal activities The Company is a public limited company incorporated in England, registered number 4627044, with its registered office at XYZ Building, 2 Hardman Boulevard, Spinningfields M3 3AQ. The principal activity of the Group is the provision of independent advice and services to customers through the provision of Software Resilience and cyber assurance services. The principal activity of the Company is that of a holding company. Going concern The Directors have acknowledged guidance published in relation to going concern assessments. The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Business Review and Chief Financial Officer’s Review. The Group’s financial position, cash and borrowing facilities are also described within these sections. The Financial Statements have been prepared on a going concern basis, which the Directors consider to be appropriate for the following reasons. The Directors have prepared cash flow and covenant compliance forecasts for the 12 month period ending 30 September 2023 which indicate that, taking account of severe but plausible downsides on the operations of the Group and its financial resources, the Group and Company will have sufficient funds to meet their liabilities as they fall due for that period. The going concern period is required to cover a period of at least 12 months from the date of approval of the Financial Statements and the Directors still consider this 12 month period to be an appropriate assessment period due to the Group’s financial position and trading performance and that its borrowing facilities do not expire until June 2024. The Directors have considered whether there are any significant events beyond the 12 month period which would suggest this period should be longer but have not identified any such conditions or events.
1 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 56 to 63 and 203 and 204 respectively.
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NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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