Ncc Group Plc · LSE:NCC
Ncc — FY2005 Earnings Presentation
28 slides from Ncc's earnings presentation, July 2005
Slide 1: NCC Group plc Preliminary results for the year ended 31 May 2005
NCC Group plc Preliminary results for the year ended 31 May 2005 July 2005 1
Slide 2: NCC Group agenda
NCC Group Highlights Divisional reviews Strategy and European expansion plans Financial summary Outlook and current trading 2
Slide 3: Highlights
Highlights Very strong performance across the Group Turnover up 24% to £18.0m Operating profit up 27% to £6.1m Adjusted EPS up 22% to 12.6p Full year dividend 2.5p, 0.25p ahead of interim base Debt free at year end – down from £5.2m on listing Increase in headcount to 216 employees, up 42% Expansion
Slide 4: Our history and financials
Our history and financials 1999 2000 2001 2002 2003 2004 2005 Group focuses on Escrow First MBO MBO Solutions Admission Prelim Results Paul Edwards to AIM 19th July Escrow Solutions appointed FD 12 July becomes motor at 170p for revenue and Rob Cotton profit growth appointed 20.00 Turnover* (£m) 15.
Slide 5: Integrated Divisions
Integrated Divisions Escrow Testing Solutions Consultancy Escrow Verification Specialist Testing Penetration Information IT Solutions Services Services Testing Services Security Consultancy Assuring your Verifying your Assuring your Securing Protecting A partnership business systems are systems’ you
Slide 6: Escrow Solutions
Escrow Solutions Sales £8.2m +23% Contribution £5.0m +32% 62 escrow solutions account managers (2004: 44) Contracts up 17% to 6,200 (2004: 5,300) Agreement beneficiaries up to over 11,000 (2004: 9,500) Contract termination rates down to 10.4% and 11.4% beneficiaries Annual renewals forecast £6.7m (2
Slide 7: Testing Solutions
Testing Solutions Sales £4.4m +26% Contribution £1.0m +18% Verification Testing - Specialist Testing - Penetration Testing Verifications - record 226 delivered in the period - up 24% 525 Penetration Tests carried out - up 71% - Rapidly evolving science - Social engineering and forensics used - Drive
Slide 8: Consultancy
Consultancy Sales £5.4m +24% Contribution £1.0m +14% IT Consultancy - IS Consultancy Independent trusted advisor status is the key 75% of current work is with existing clients Now employ 30 consultants an increase of 36% in the year Utilisation rates managed to 80% IT Consultancy up 9% IS Consultanc
Slide 9: Group Strategy
Group Strategy Focus on organic growth across the Group client numbers – repeat and new range of products and services – constant evolution Recruit and retain high quality staff – up 46% to 216 Exploit new opportunities in markets – e.g. Penetration Testing and IS Consultancy Leveraging independence
Slide 10: European Expansion
European Expansion Over £1m of Escrow Solutions sold over last 2 years into Continental Europe Initiated detailed market research into German and Dutch markets German business to be used as the launch pad existing clients renewals base already profitable Team established Committed £0.5m investment i
Slide 11: Group Financial Performance
Group Financial Performance Year to 31 May 2005 2005 2004 % £m £m change Turnover Escrow Solutions 9.0 7.5 20 Testing Solutions 4.4 3.4 26 Consultancy 5.4 4.4 24 Deferred income (0.8) (0.8) - Total Turnover 18.0 14.5 24 Operating profit Escrow Solutions 5.0 3.7 32 Testing Solutions 1.0 0.9 18 Consul
Slide 12: Group Financial Performance
Group Financial Performance Year to 31 May 2005 2005 2004 % £m £m change Operating profits * 6.1 4.8 27 Amortisation (1.5) (1.5) - Exceptional (0.9) - - Interest (0.3) (1.9) (67) Pre tax profits 3.4 1.4 143 Adjusted EPS (p) 12.6 10.3 22 Underlying pre tax profits* 5.7 2.9 97 Total dividend per share
Slide 13: Group Financial Performance: Cash flow
Group Financial Performance Cash flow 12 months to 31 May 2005 £'000 Net cash inflow from operating activities 7,661 Returns on investments and servicing of finance (72) Taxation (1,041) Capital expenditure and financial investment (800) Equity dividends paid (245) Cash inflow before financing 5,503
Slide 14: International Financial Reporting Standards
International Financial Reporting Standards Initial Assessment of impact already assessed Early adoption 2 years ahead of mandate - interim November 2005 £’000s Goodwill (1,500) Employee share schemes 338 Deferred tax asset (101) Profit & loss account credit 1,263 In addition the proposed dividend o
Slide 15: Current Trading and Outlook
Current Trading and Outlook Recruitment continues to remain biggest challenge Year starts with planned levels of staff Escrow code dual and on line depositing will be brought forward – new separate secure vault taken on Escrow renewals at record £6.7m for year (2005: £5.8m) Testing Solutions order b
Slide 16: Appendices
assure -secure - advise Appendices
Slide 17: Escrow Solutions
Escrow Solutions Cornerstone of NCC Group in profit Agreements automatically and turnover renew annually Only significant European provider Agreements sold globally Provides service to over 11,000 beneficiaries Dual and electronic deposit service now launched 91 of FTSE 100 have All code is integrit
Slide 18: Escrow Solutions: What is an Escrow Solution?
Escrow Solutions What is an Escrow Solution? Escrow is a legal contract between three parties - licensor (or owner), licensee and an independent trusted third party Holds software source code or business critical material Provides protection from key supplier failure or a failure of maintenance Demo
Slide 19: Escrow Solutions
Escrow Solutions Deposit of source code Licensor Sale of business critical software Licensee Annual recurring fee “High value low cost concept” 19
Slide 20: Escrow Solutions: Market potential
Escrow Solutions Market potential Addressable UK market estimated at £65m - £85m* Most companies do not have sufficient protection Existing customers are a significant growth opportunity Customers average now c.1.8 agreements NCC Group is the market leader * * Source : Gartner Consulting 2004 20
Slide 21: Escrow Solutions: NCC Group market position
Escrow Solutions NCC Group market position Competition Barriers to entry Over 20 years’ experience Independence Integrity testing and legal documentation Sales model Low cost high volume business model Beneficiary base with low churn 21
Slide 22: Testing Solutions
Testing Solutions Verification Services confirmation code held under an Escrow In the testing market for over 20 years agreement works Specialist Testing proves systems robustness & performance Depth of expertise capabilities and knowledge Penetration Testing uncovers security weakness by controlled
Slide 23: Testing Solutions: Verification Testing
Testing Solutions Verification Testing Sold by Escrow Solutions sales team – high growth area Delivered by Testing Solutions technical resources Three levels of service Integrity Plus – collection and securing code Full Verification – assurance over code compilation Escrow Complete – disaster recove
Slide 24: Testing Solutions: Specialist Testing
Testing Solutions Specialist Testing Performance and robustness testing of mobile data infrastructure Interoperability testing for handsets, MMS and video streaming Performance testing of Web applications Definition of test strategies and regimes Consultants have highly specialist skills 24
Slide 25: Testing Solutions: Penetration Testing
Testing Solutions Penetration Testing A leading UK provider of Penetration Testing services Ethically hack networks and Web sites Expert CHECK accredited and team leaders - only c.80 in the UK Consultant rather than tool led – nearly 50 man years of experience 25
Slide 26: Consultancy
Consultancy Reputation for technical excellence in public and private sectors Completely independent More than 75% of revenues in 2004/05 from existing clients – “Trusted Advisor” Only use expert, qualified and experienced consultants Greenhouse environment - two business units developed from consul
Slide 27: Consultancy: IT Consultancy
Consultancy IT Consultancy Help clients maximise value from their IT Independence from hardware and solution providers is key strength Consultants for over 30 years on whole IT lifecycle Over 75% of 2004/05 revenue came from existing clients 27
Slide 28: Consultancy: Information Security Consultancy
Consultancy Information Security Consultancy Sound governance and regulatory requirements forcing compliance – market spent £1.25bn in 2003 Ensure clients information and infrastructure are safe, secure and compliant Grown out of IT Consultancy to allow focused growth Independence has proved key to