NCC Group plc Annual Report 2022

Notes to the Financial Statements continued for the year ended 31 May 2022

1 Accounting policies continued Assurance

Timing of satisfaction of performance obligations and significant payment terms The customer simultaneously receives the benefits of the consulting services provided by the Group over the period over which the work is performed and one promise (performance obligation) is identified. Work is performed on a daily basis. Invoices are raised monthly or based on an agreed invoicing profile with the customer. Invoices are usually payable within 30 days. No discounts or retrospective rebates are provided. Where a set deliverable is required and the customer receives the incremental benefit at the end of the work when the deliverable is transferred to the customer, this represents one performance obligation. In this situation, the contract will have no abortive revenue rights; therefore, the Group has no right to consideration for performance to date. Invoicing will usually be on completion of the set deliverable and payable within 30 days. The customer simultaneously receives and consumes the benefits of the consulting services provided by the Group over the period over which the work is performed by the Group and one performance obligation is identified. Invoices in relation to the abortive revenue will be recognised when aborted. Invoices are usually payable within 30 days. The customer will benefit from the services over the period of the contract. However, the type of contract will depend on how the customer benefits from the software licence(s).

Revenue recognition policies, including determination of transaction price and rationale Revenue is recognised on an input basis to measure the satisfaction of performance obligations over time. This is done according to the number of days worked in comparison to the total contracted number of days of the performance obligation. The work performed occurs on a daily basis (for example security assessment of a customer’s security environment). It is considered that as the customer benefits over time based on consultants’ time, the input method faithfully depicts the Group’s performance towards complete satisfaction of the single performance obligation. Transaction price is determined by fixed contract rates based upon day rates and number of days. Revenue is recognised at a point in time, on completion of the performance obligation deliverable. It is considered that as the customer benefits once the set deliverable is received, the point in time method faithfully depicts the Group’s performance towards complete satisfaction of the single performance obligation. Transaction price is determined by fixed contract rates. Revenue is recognised on an input basis to measure the satisfaction of performance obligations over time. This is done according to the number of days worked in comparison to the total contracted number of days of the performance obligation. Transaction price is determined by fixed contract rates based upon day rates and number of consultancy days. The amount of revenue recognised in relation to software licence(s) depends on whether the Group acts as an agent or as a principal. The Group acts as principal when the Group controls the specified software licence or service prior to transfer (MSP model).

Revenue stream

Nature

Global Professional Services (GPS)

GPS is the Group’s core consulting service represented by consultants providing cyber security consultancy services to

a customer over time or to a set deliverable.

Some contracts may contain multiple services (e.g. cyber security assessment and certified product evaluation services). These will be identified as separate performance obligations, and the transaction price allocated to each of these is determined by using the fixed contract rate based upon day rates, being the relative standalone selling price basis. Specifically, the contract terms range from time and materials (based upon consultants’ time and expenses) and discrete statements of work, whereby the customer benefits gradually over the period over which the work is performed, unless there is a set deliverable (for example a defined security assessment report). The Group in certain situations operates on agreed customer terms, which allow the Group to recover any abortive revenue from its customer in the event that a customer terminates a contract before the contract or deliverable is complete.

Global Managed Services (GMS)

These services provide operational cyber defence, incident response, scanning, simulation and managed security operations centres (SOCs). Services are typically

for an extended delivery duration, with contract lengths varying up to a maximum of five years.

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NCC Group plc — Annual report and accounts for the year ended 31 May 2022

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