Ncc Group Plc · LSE:NCC
Ncc — H1 2009 Earnings Presentation
25 slides from Ncc's earnings presentation, January 2009
Slide 1: NCC Group plc Interim Results
NCC Group plc Interim Results for the six months ended 30 November 2008 January 2009
Slide 2: Agenda
Agenda Highlights Group strategy Acquisition of NGSS Limited Group financial summaries Divisional reviews – Escrow Solutions – Assurance Testing – Consultancy Current trading & outlook 2
Slide 3: Highlights – maintaining strong growth
Highlights – maintaining strong growth Revenue up 27% to £20.8m Operating profits up 17% to £5.5m – Group Escrow Solutions up 19% to £5.5m – UK Escrow Solutions up 10% to £4.9m – Assurance Testing up 25% to £1.0m – Consultancy up 71% to £0.2m Adjusted diluted EPS up 13% to 11.0p Interim divi
Slide 4: Track record since float
Track record since float Revenue (£m) Operating profit (£m) Fully diluted adjusted EPS (p) 40 12 25 10 30 20 8 £m £m 20 6 p 15 4 10 10 2 5 0 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Dividend (p) Share Price (pence) Full year 8 130 Interim 120 6 110 NCC Group p 4
Slide 5: Three complementary divisions
NCC Group plc Three complementary divisions Escrow Solutions Assurance Testing Consultancy Revenue: £9.9m Revenue: £7.7m Revenue: £3.2m Contribution: £5.5m Contribution: £1.0m Contribution: £0.2m Escrow UK Secure Test Information Security Escrow Europe Site Confidence Information Technol
Slide 6: Group strategy
Group strategy Focus on next 12 months – see who is still standing! Concentrate on non discretionary spend areas Keep on doing what we have always been doing – Solid organic growth in growing markets – Recruitment – account managers & testers – Product development & innovative service developm
Slide 7: Acquisition – NGSS
Acquisition – NGSS Premier player in Ethical Security & Security Software market Operates from UK & US – customers worldwide Premium customer base – nearly all major global banks & software developers Small niche software development team – specific credible testing tools Excellent reputat
Slide 8: Group revenues
Group revenues 30 November 2008 2007 % % Organic £m £m Growth Growth Revenue Escrow UK 7.9 7.8 1% 1% Escrow Europe 1.2 0.1 - - Escrow US 0.8 0.5 61% 61% Total Escrow Solutions 9.9 8.4 17% 6% Assurance Testing 7.7 5.8 32% 21% Consultancy 3.2 2.1 51% 51% Total Revenue 20.8 16.4 27% 18% UK 16.9 13.7 23
Slide 9: Group operating profits
Group operating profits 30 November 2008 2007 % % Organic £m £m Growth Growth Contribution Escrow UK 4.9 4.5 10% 10% Escrow Europe 0.4 0.0 - - Escrow US 0.2 0.1 25% 25% Total Escrow solutions 5.5 4.6 19% 12% Assurance Testing 1.0 0.8 25% 16% Consultancy 0.2 0.1 71% 71% Corporate (1.2) (0.9) 45% 45%
Slide 10: Group financial performance
Group financial performance 30 November 2008 2007 % £m £m Change Adjusted operating profit 5.5 4.7 17% Exceptional item – move to full list - (0.5) - Amortisation (0.5) (0.3) 87% Interest (0.3) (0.2) 30% Pre Tax Profits 4.7 3.7 27% Adjusted Pre Tax Profits 5.2 4.6 13% Adjusted full diluted EPS (p) 1
Slide 11: Balance sheet
Balance sheet Cash conversion improved to 119% (118% in 2007) of operating profits Group £11.9m net debt (£0.2m net debt in 2007) – Debt free by November 2010 if no further acquisitions Low exposure to bad debt Committed multi option credit facility of £15m – New banking terms extended to Ju
Slide 12: Group cash flow
Group cash flow 30 November 2008 2007 £m £m Cash generated from operations* 5.9 4.6 Net Interest paid (0.2) (0.1) Income taxes paid (0.7) (1.2) Acquisition of property, plant and equipment (0.6) (0.9) Acquisition of business** (10.7) (3.4) Cash outflow before financing activities (6.3) (1.0) Receipt
Slide 13: Escrow Solutions UK
Escrow Solutions UK Sales £7.8m +1 % Contribution £4.9m +10% Verifications have been hit by the downturn – down 20% on 2007 and £0.5m below expectations Retrospective escrow is bridging the gap – order book £2.1m (May 2008 £2.1m) Price increase of 8% implemented – no adverse impact UK annual
Slide 14: Escrow Solutions Europe & US
Escrow Solutions Europe & US Sales - Europe €1.5m Sales - US $1.5m +40% Contribution €0.5m Contribution $0.3m +7% Total non UK renewals base worth - £2.6m (£1.0m in 2007) Verifications gaining traction in US & continuing to perform well in Europe US management team stable, European Management
Slide 15: Assurance Testing
Assurance Testing Sales £7.7m +32% Contribution £1.0m +26% Ethical Security Testing – NCC Group Secure Test Team now up to 89 testers Market appetite undimmed despite economic downturn Efficiencies being gained by multi site 21% organic sales growth Performance and Load Testing Small d
Slide 16: Assurance Testing
Assurance Testing Information security threats continue to increase – it’s an arms race IT security landscape threatened by – Organised crime – Malicious employees – Incompetents (government data losses) – User stupidity (social networking) – Corporate espionage Attacks and breaches are daily
Slide 17: Consultancy
Consultancy Sales £3.2m +51% Contribution £0.2m +71% Independent trusted advisor status remains key to credibility Demand for Information Security remains key – Government data losses & compliance issues Over 50% of revenue now generated by Information Security Business has retained firm con
Slide 18: Current trading & outlook
Current trading & outlook Economy dominates trading – Group is well protected from the downturn but nobody is impervious Focus & concentrate on core strengths Opportunistic, well priced acquisitions considered Group orders & renewals at £29.3m for 2008/09 (£26.8m in May 2008) – Escrow Soluti
Slide 19: Appendices
Appendices Nee: oT mE me a
Slide 20: Escrow Solutions
Escrow Solutions Cornerstone of NCC Group in Agreements automatically profit and revenue renew annually World’s largest escrow provider Agreements sold globally Provides service to over 26,000 parties globally Escrow Live customer portal provides secure online depositing and account manageme
Slide 21: Escrow Solutions
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 failure of maintenance
Slide 22: Escrow Solutions
Escrow Solutions De Licensor sou posit rc e of cod e Sale of business High value low critical software cost concept nn ual e A r in g fe Licensee r r ecu 22
Slide 23: Assurance Testing
Assurance Testing In the testing market Ethical Security Testing for over 25 years Uncovers security weakness by controlled invasion of a network or website NGSS are industry experts Forensic services specialising in technically complex computer & digital evidence Performance and Load Testing Tw
Slide 24: Consultancy
Consultancy Reputation for technical excellence in Completely independent speciality sectors Information security is long term future of the business area Only use expert, qualified and experienced consultants Strength in information security consulting – 50% of revenue Have maintained long te
Slide 25: Our customers
Our customers ‘ ° EVERSHEDS nationalgrid © Sap totaljobs.com oo S fish U N | 2 O N @ First Choice — LINSELL FABER MA\ the public service union lastminute.com SIEMENS | BAA W1 noower £ . cl BR dts orange a o Investec STANDARD LIFE aa & Excise ™ CAPITA A NCC: Bm Mm mm” a la