Alternative Performance Measures (APMs) Throughout this Chief Financial Officer’s Review, certain APMs are presented. The APMs used by the Group are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, IFRS measures. This presentation is also consistent with the way that financial performance is measured by management and reported to the Board, and the basis of financial measures for senior management’s compensation scheme, and provides supplementary information that assists the user in understanding the financial performance, position and trends of the Group. We believe these APMs provide readers with important additional information on our business and this information is relevant for use by investors, securities analysts and other interested parties as supplemental measures of future potential performance. However, since statutory measures can differ significantly from the APMs and may be assessed differently by the reader, we encourage you to consider these figures together with statutory reporting measures noted. Specifically, we would note that APMs may not be comparable across different companies and that certain profit related APMs may exclude recurring business transactions (e.g. acquisition related costs and certain share-based payment charges) that impact financial performance and cash flows. As the Group manages internally its performance at an Adjusted operating profit level (before Individually Significant Items, amortisation of acquired intangibles and share-based payments), which management believes represents the underlying trading of the business, this information is still disclosed as an APM. This APM is reconciled to statutory operating profit, together with the consequently Adjusted basic EPS (before Individually Significant Items, amortisation of acquired intangibles, share-based payments and the tax effect thereon), to statutory basic EPS.
The Group noted the following APMs/non-statutory measures: • Adjusted EBITDA (reconciled in Note 3) • Adjusted operating profit (reconciled in Note 3) • Adjusted basic EPS (pence) (reconciled in Note 11) • Net (debt)/cash excluding lease liabilities (reconciled in Note 3) • Net (debt)/cash (reconciled in Note 3) • Cash conversion (reconciled in Note 3) • Constant currency revenue (reconciled in Note 3) • Revenue excluding IPM acquisition (reconciled in Note 3) • Software Resilience revenue excluding IPM acquisition (reconciled in Note 3) The above APMs are consistent with those reported for the year ended 31 May 2021, except for the inclusion of revenue excluding IPM acquisition and Software Resilience revenue excluding IPM acquisition to allow stakeholders to understand the revenue performance of the existing business for the year ended 31 May 2022 prior to acquiring IPM in June 2021. In comparison to those APMs reported for the period ended 30 November 2021, one APM (cash conversion excluding IPM acquisition costs) has been removed to reduce the level of APMs reported. The Group also reports certain geographic regions on a constant currency basis to reflect the underlying performance taking into account constant foreign exchange rates period on period. This involves translating comparative numbers to current period rates for comparability to enable a growth factor to be calculated. As these measures are not statutory revenue numbers, management considers these to be APMs; see Note 3 for further details and certain reconciliations to statutory measures. Further detail is included within the Glossary of terms to the Financial Statements that provides supplementary information that assists the user in understanding these APMs/non-statutory measures.
Assurance The Assurance division accounts for 82.1% of Group revenue (2021: 86.5%) and 69.6% of Group gross profit (2021: 76.3%). Assurance revenue analysis – by originating country:
% change at constant currency 1
2022 £m
2021 £m
% change at actual rates
114.6
UK and APAC North America
102.7 11.6% 11.8% 82.7 13.8% 14.6%
94.1 49.8
Europe
48.5
2.7% 8.0%
Total Assurance revenue
258.5
233.9 10.5% 12.1%
Assurance revenue increased by 12.1% on a constant currency basis 1 and at 10.5% at actual rates. UK and APAC increased by 11.8% on a constancy currency basis 1 (11.6% at actual rates) supported by growth in Professional Services. North America grew by 14.6% on a constant currency basis 1 (13.8% at actual rates), and Europe experienced growth of 8.0% on a constant currency basis 1 (2.7% at actual rates). From a H2 2022 2 perspective compared to the same comparator period, Assurance revenue increased by 15.1% on a constant currency basis 1 and at 15.8% at actual rates. UK and APAC increased by 16.1% on a constancy currency basis 1 (15.8% at actual rates). North America grew by 20.1% on a constant currency basis 1 (26.2% at actual rates); however, Europe only experienced growth of 4.6% on a constant currency basis 1 (-0.4% at actual rates). Our H2 2022 2 performance compared to H1 2022 2 showed Assurance revenue increased by 8.8% on a constant currency basis 1 and at 5.2% at actual rates. UK and APAC increased by 7.5% on a constancy currency basis 1 (7.3% at actual rates). North America grew by 8.9% on a constant currency basis 1 (2.3% at actual rates) and Europe experienced growth of 11.8% on a constant currency basis 1 (6.0% at actual rates). 2 See Note 3 for a reconciliation of H1 2022 and H2 2002 revenue performance compared to the same comparator period.
NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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