Slide 1: Half Year Results
Half Year Results Six months to 30 November 2022 02 February 2023
Slide 2: Initial impressions
Initial impressions Mike Maddison CEO
Slide 3: NCC Group: a market leading cyber security company
NCC Group: a market leading cyber security company Distinct businesses • Assurance and Software Resilience • Different buyers and sales cycles A strong track record • Working with the world’s leading companies • Strong footprint with Governments • Growth focused: revenue CAGR of 8% since 2018 • Mark
Slide 4: Built on strong foundations
Built on strong foundations NCC Group’s DNA Innovation Intelligence Insight NCC Group’s capability and people • Passionate about our purpose • Market leaders in testing and assurance services • Have leading edge systems • Highly successful at attracting and retaining talent Half Year Results – six m
Slide 5: The Next Chapter of our strategy
The Next Chapter of our strategy A strategy designed to deliver enhanced growth and greater resilience • Our clients • Our capabilities • Global delivery and operating model • Differentiated brands Mid-teens revenue growth in Cyber Security over the medium term, and mid-teens Adjusted EBIT margin, f
Slide 6: Robust H1 with the market becoming more challenging
Robust H1 with the market becoming more challenging Robust trading performance Double-digit revenue growth with Adjusted EBIT slightly ahead of last year Balance sheet strength New four-year enlarged £162.5m multi-currency revolving credit facility signed in December 2022, to enable new strategy Cur
Slide 7: Looking forward – the next chapter
Looking forward – the next chapter Mike Maddison CEO
Slide 8: NCC Group has two distinct businesses
NCC Group has two distinct businesses Our business today Our future business – the next chapter Large potential to grow the • Dynamic business protecting companies existing business through: Focus of against an evolving spectrum of cyber • Greater geographic and growth threats Cyber Assurance client
Slide 9: Our strategy to enhance growth by focusing on cyber security
Our strategy to enhance growth by focusing on cyber security Our Global Differentiated 1 Our clients 2 3 4 capabilities delivery brands Deeper client Broader service Transitioning from Distinct and engagement on portfolio an international to relevant brands for their most pressing addressing the ful
Slide 10: Doubling-down on client sectors with the most opportunity
Doubling-down on client sectors with the most opportunity Our Global Differentiated 1 Our clients 2 3 4 capabilities delivery brands Focus sectors ▪ Focusing on the fastest growing sectors – specifically those which are Financial Services highly-regulated and most exposed to cyber risk TMT ▪ The rig
Slide 11: End-to-end cyber security services to address growing client needs
End-to-end cyber security services to address growing client needs Our Global Differentiated 1 Our clients 2 3 4 capabilities delivery brands Relative NCC Future highest scale today growth driver Strategic objectives Incident Response Helping clients respond to security incidents Maintain high quali
Slide 12: An efficient, agile and scalable global delivery model
An efficient, agile and scalable global delivery model Our Global Differentiated 1 Our clients 2 3 4 capabilities delivery brands Delivering globally with new leadership tasked with developing the best skills with flexible resourcing: • Global resourcing and scheduling • Setting up teams to learn, t
Slide 13: Creating distinct and relevant brands
Creating distinct and relevant brands Our Global Differentiated 1 Our clients 2 3 4 capabilities delivery brands New CMO CMO appointed Jan ’23 responsible for the delivery of a coordinated Marketing, Communications, Brand and Public Affairs strategy Develop differentiated, stand-out brands for Cyber
Slide 14: Strategic investment – generating net revenue growth from FY24
Strategic investment – generating net revenue growth from FY24 Investment Pillar Nature of global investment FY23 Clients • Incremental costs of new sales verticals, deep sector Client centricity experts and global sales operation teams Capabilities • Enhanced offering including XDR Cyber services •
Slide 15: The next chapter – key outcomes
The next chapter – key outcomes: Impact: Cyber Security target mid-teen revenue growth rate (medium term) Driven by: - Accelerated growth in Managed Services and Consulting & Implementation - Continued investment in Technical Assurance and Incident Response Target mid-teens Adjusted EBIT margin (med
Slide 16: Financial Review
Financial Review Tim Kowalski CFO
Slide 17: Statutory financial summary (actual exchange rates)
Statutory financial summary (actual exchange rates) Revenue Gross Profit Gross Margin % £176.6m £72.3m 40.9% +17.7% H1 2022: £150.1m +13.5% H1 2022: £63.7m (1.5%) pts H1 2022: 42.4% Adjusted EBIT 1 Adjusted EBIT Margin % Adjusted EBITDA 2 £20.5m 11.6% £26.7m +1.5% H1 2022: £20.2m (1.9%) pts H1 2022:
Slide 18: Operational KPIs
Operational KPIs Accelerating our future growth engines H1 2023 H1 2022 Growth Drivers Remediation sales grew at +20% YOY, to £4.4m with more client take up Remediation Sales (£k) 4,377 3,647 Microsoft XDR sales successfully grew +395% to £9.1m Microsoft XDR Sales (£k) 9,057 1,831 Escrow-as-a-Servic
Slide 19: Financial performance – Group income statement
Financial performance – Group income statement Revenue: Double-digit growth at constant currency Robust H1 performance Revenue +10.2% at constant currency, +17.7% actual rates Gross profit: Margin reduction driven by lower utilisation H1 2023 H1 2022 % change £m £m Gross margin (%) decreased -1.5% p
Slide 20: Assurance financial performance
Assurance financial performance Slower Q1, stronger Q2 Revenue: slower Q1 mainly due to impact of NCC Conferences, Revenue by region - Constant Currency stronger Q2 +12.0% +16.1% Assurance grew +10.8% at constant currency basis to £145.0m (+17.7% actual rates) £61.6m £59.2m £55.0m Performance across
Slide 21: Assurance service line performance
Assurance service line performance Double digit growth for all service lines Revenue by service line - constant currency Global Professional Services (GPS) +10.4% YOY (at constant Global Professional currency) £100.6m Services Driven by growth in Remediation, global resourcing and increased £111.1m
Slide 22: Software Resilience financial performance
Software Resilience financial performance LFL revenue returned to growth in Q2 Revenue: Q2 saw a return to growth LFL LFL Revenue by region - Constant Currency SR Group revenue LFL declined -1.6% at constant currency - Q1 LFL revenue declined -4.5% at constant currency following NA sales team reorga
Slide 23: Software Resilience service line performance
Software Resilience service line performance Continued verification growth LFL Revenue by service line - constant currency Contract decline mainly arising from mature Software resilience UK on-prem market contracts £23.1m Verification growth mainly driven by North £21.3m -7.8% America market as expe
Slide 24: Financial performance - Cash
Financial performance - Cash Free cash flow and cash conversion both up YOY H1 2023 H1 2022 Net debt: Cash conversion improved to 91.0% (H1 2022: 74.7%) £m £m Cash conversion of 91.0% expected to return to normalised group level of c.85% over Cash flow before working capital 24.8 19.0 the medium ter
Slide 25: Current trading
Current trading Since the beginning of H2 2023 we have experienced a lengthening of the sales cycle, which is leading to delays in buying decisions, work commencement and therefore revenue recognition, particularly in North America and the UK Given the customer behaviour we are experiencing, 2023 Gr
Slide 26: Strategic actions
Strategic actions The Board remains confident in the medium-term prospects for the cyber market and these strategic actions will position the business to capitalise when the market improves Accordingly, the Board remains committed to implementing the next chapter of our strategy to enhance future gr
Slide 27: Summary
Summary Mike Maddison CEO ncecgroup*
Slide 28: Summary – focused on enhanced growth
Summary – focused on enhanced growth H1 performance: Robust trading Solid foundations Outlook: Clients are experiencing economic headwinds, with a consequential short term impact on our FY23 revenues and profitability The Board remains confident in the outlook and committed to invest in the next cha
Slide 29: neegroup®
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Slide 30: Appendices
C eS oA ppendl ae
Slide 31: Notations
Notations Page 8 1. All financial performance numbers presented are based on post IFRS-16 unless specifically noted. References to the Group’s results are to continuing operations. See Note 3 of the RNS for an explanation of Alternative Performance Measures (APMs) and adjusting items. Further inform
Slide 32: Disclaimer
Disclaimer This presentation, including a hard copy of these slides, the talks given by the presenters, the information communicated during any delivery of the presentation and any question and answer session and any document or material distributed at or in connection with the presentation (togethe