Notes to the Financial Statements continued for the year ended 31 May 2022
1 Accounting policies continued New and amended accounting standards that have been issued but are not yet effective At the date of authorisation of these Financial Statements, the following standards and interpretations were in issue but have not been applied in these Financial Statements as they were not yet mandatory: • IFRS 17 ‘Insurance Contracts’
• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) • Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) • Reference to the Conceptual Framework (Amendments to IFRS 3)
• Property, Plant and Equipment – Proceeds Before Intended Use (Amendments to IAS 16) • Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) • Definition of Accounting Estimates (Amendments to IAS 8) • Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12) • Annual Improvements to IFRS Standards 2018–2020 Cycle – Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’, IFRS 9 ‘Financial Instruments’, IFRS 16 ‘Leases’, and IAS 41 ‘Agriculture’ These IFRSs are not expected to have a material impact on the Group’s consolidated financial position or performance of the Group. Application of significant new or amended EU-endorsed accounting standards The following amended standards and interpretations were also effective during the year; however, they have not had a material impact on our consolidated Financial Statements. • Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) • Covid-19-Related Rent Concessions Beyond 30 June 2021 (Amendment to IFRS 16) Basis of measurement The consolidated Financial Statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments and investments. In addition, at the date of the acquisitions consideration payable is at fair value. Functional and presentation currency The Group and Company Financial Statements are presented in millions of Pounds Sterling (£m) because that is the currency of the principal economic environment in which the Group operates. 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. 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.
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NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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