NCC Group plc Annual Report 2022

4 Segmental information The Group is organised into the following two (2021: two) reportable segments: Assurance and Software Resilience. The two reporting segments provide distinct types of service. Within each of the reporting segments the operating segments provide a homogeneous group of services. The operating segments are grouped into the reporting segments on the basis of how they are reported to the chief operating decision maker (CODM) for the purposes of IFRS 8 ‘Operating Segments’, which is considered to be the Board of Directors of NCC Group plc. Operating segments are aggregated into the two reportable segments based on the types and delivery methods of services they provide, common management structures, and their relatively homogeneous commercial and strategic market environments. Performance is measured based on reporting segment profit, which comprises Adjusted operating profit 1 and adjusting items are not allocated to business segments. Interest and tax are also not allocated to business segments and there are no intra-segment sales. The IPM business acquired on 1 June 2021 is considered to be part of the Software Resilience business segment.

Software Resilience £m

Central and head office £m

Assurance £m

Group £m

Segmental analysis 2022

Revenue

258.5

56.3

– – – –

314.8

(166.2)

(16.0)

(182.2)

Cost of sales

Gross profit

92.3

40.3

132.6 42.1%

35.7% 71.6%

Gross margin %

(53.2)

(17.5)

(2.7)

(73.4)

General administrative expenses allocated

39.1

22.8

(2.7) (3.1)

59.2

Adjusted EBITDA 1

(7.2)

(0.8)

(11.1)

Depreciation and amortisation

Adjusted operating profit 1

31.9

22.0

(5.8)

48.1

(0.9) (4.8) (0.3)

(0.9) (8.6) (3.9)

Individually Significant Items (Note 5) Amortisation of acquired intangibles

(0.9) (2.1)

(2.9) (1.5)

Share-based payments

Operating profit

28.9

16.0

(10.2)

34.7

(3.7)

Finance costs

Profit/(loss) before taxation

31.0

(8.0)

Taxation

Profit for the year

23.0

1 S ee Note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items, including a reconciliation to statutory information. Further information is also contained within the Glossary of terms on pages 203 and 204.

Software Resilience £m

Central and head office £m

Assurance £m

Group £m

Segmental analysis 2021

Revenue

233.9

36.6

270.5

Cost of sales

(149.5)

(10.4)

– (159.9)

Gross profit

84.4

26.2

110.6

Gross margin %

36.1% 71.6%

– 40.9%

General administrative expenses allocated

(45.4)

(9.5)

(3.2)

(58.1)

Adjusted EBITDA 1

39.0

16.7

(3.2) (3.2) (6.4) (5.1) (5.1) (1.2)

52.5

Depreciation and amortisation

(9.4)

(0.7)

(13.3)

Adjusted operating profit 1

29.6

16.0

39.2

Individually Significant Items (Note 5) Amortisation of acquired intangibles

(7.6)

(12.7)

(1.3) (1.5)

(6.4) (2.8)

Share-based payments

(0.1)

Operating profit

26.8

8.3

(17.8)

17.3

Finance costs

(2.5)

Profit/(loss) before taxation

14.8

Taxation

(4.8)

Profit for the year

10.0

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

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