Slide 1: Full Year Results for the year ended 31 May 2019
Full Year Results for the year ended 31 May 2019 25 July 2019
Slide 2: Agenda
Agenda Adam Palser Overview CEO Tim Kowalski Financial review CFO Adam Palser Business review CEO Q&A Appendix 2
Slide 3: Overview
Overview Profits: H2 EBIT up 11% to £18.9m (H2 2018*: £17.0m) Cash: Improved working capital processes have led to net debt reducing to £20.2m (FY18: £27.8m) People: Successful programme of recruitment and retention Strong • Assurance: Technical teams fully resourced for growth; operational focus no
Slide 4: Full year highlights and outlook
Overview • Robust global revenue growth, good profitability and excellent cash generation during first full year of operational transformation through our Securing Growth Together programme Full year • 10% revenue growth in Assurance and gross margin continues to highlights increase • A year of tran
Slide 5: Agenda
Agenda Adam Palser Overview CEO Tim Kowalski Financial review CFO Adam Palser Business review CEO Q&A Appendix 5
Slide 6: Financial summary
Financial summary Robust revenue, growing profit and better cash generation Revenue*1 (£m) Adjusted EBIT*1*2 (£m) Adjusted EBIT Margin*1*2 % (2018: £233.0m) (2018: £30.8m) 13.4% (2018: 13.2%) £250.7m £33.7m +0.2%pts Gross Margin*1 % Assurance GM*1 % Escrow GM*1 % 40.6% (2018: 41.2%) 34.6% (2018: 34.
Slide 7: Financial performance – income statement
Financial performance – income statement Profitable growth in first year of transformation 2019 2018* • North America and Europe & RoW strong growth Continuing operations (£m) (£m) Revenue 250.7 233.0 • UK, across Assurance and Escrow, continued to Cost of Sales (148.9) (137.1) have sales capability
Slide 8: Financial performance – Group revenue bridge
Financial performance – Group revenue bridge Robust Assurance revenue growth * ** *** • Fall in product sales consistent with strategy to de-emphasise non-value added sales • Assurance delivered strong growth (+9.7%) of £18.8m to grow to £212.7m*** • Escrow overall decline of -2.8%; mainly due to UK
Slide 9: Financial performance – adjusted EBIT bridge
Financial performance – adjusted EBIT bridge^ Year on year profitable growth while investing in transformation * • Assurance increase is driven by increased revenues, gross margin improvement offset by increased people and allocated corporate costs • Escrow decline is a result of the impact of decre
Slide 10: Financial performance – Assurance
Financial performance – Assurance Profitable growth globally although variability in regional demand • Revenue growth per territory: • Strong in North America: +23.4% to £75.5m • Robust in Europe and RoW: +12.9% to £48.3m • Disappointing in UK: +3.1%** excluding products (-1.1% overall to £88.9m) •
Slide 11: Financial performance – Escrow
Financial performance – Escrow Targeting growth after re-investment in sales and launch of cloud- resilience EaaS • Good growth in North America revenue +10.7% (2018: - 5.1%) as we increase our presence there • UK disappointing with operational challenges resulting in revenue decline of -6.5% leadin
Slide 12: Financial performance – net debt
Financial performance – net debt Sustainable working capital improvements drive net debt reduction • Net debt reduced to £20.2m from £27.8m in 2018 and £45.1m at H1 • Sustainable change in cash management • Debtor Days improved to 56 days (74 at H1; 61 in FY18) • Creditor Days at 52 days (31 at H1;
Slide 13: Financial performance – cash flow
Financial performance – cash flow Strong free cash flow discipline 2019 2018* £m £m Cash flow before working capital 41.3 39.8 • Net cash flow impacted by: Movement in working capital 6.6 (0.3) • Net tangible and intangible asset spend (£9.1m), Cash generated from operating activities 47.9 39.5 redu
Slide 14: Agenda
Agenda Adam Palser Overview CEO Tim Kowalski Financial review CFO Adam Palser Business review CEO Q&A Appendix 14
Slide 15: Our mission is to make the world safer and more secure
Our mission is to make the world safer and more secure to enable society to thrive Our vision is to be: The leading cyber security advisor globally. Trusted to protect and secure our customers’ critical assets. Sought-after for our complete people-led, technology enabled cyber security solutions tha
Slide 16: Our strategic pillars
Our strategic pillars The leading cyber security advisor globally in our chosen markets. Trusted to protect and secure our customers’ critical assets. Sought-after for our complete people-led, technology-enabled cyber security solutions that enable individuals, businesses and society to thrive. For
Slide 17: Three year transformation (SGT) on track
Three year transformation (SGT) on track Systems on time and within budget • Strategy, vision and values defined and colleagues engaged • Increased collaboration between businesses • Sort the business basics: • Salesforce launched in UK and Europe • Gated business lifecycle designed and launched • S
Slide 18: Our people
Our people Successful programme of recruitment and retention measures implemented 2019 • Number of colleagues in NCC grew by 11.5% to 1,817 • Global voluntary attrition** decreased to 16.8% (2018: 19.0%); Support total attrition decreased from 23.4% to 22.2% 364 people +13.0% • Our focus on Technica
Slide 19: What does our strategy mean for Assurance and Escrow?
What does our strategy mean for Assurance and Escrow? Our strategic priorities, as shared last year, remain unchanged Delivering continued double-digit growth and steady margin improvement in Assurance • Increasing global capacity and reach • Launching co-ordinated global Managed Detection and Respo
Slide 20: Assurance – a dynamic global market for cyber services
Assurance – a dynamic global market for cyber services Strategic priorities Dynamics Actions Completed What’s next? Unified platform for global Fragmented markets at local Increased global resourcing Increasing global capacity scheduling and visibility level and reach Lower attrition + higher capaci
Slide 21: Assurance Revenues by Business line
Assurance Revenues by Business line Trusted to protect and secure our customers’ critical assets Technical Security Risk Management Consulting Consulting (16.6% of total) (63.4% of total) £35.3m • Rapid growth of +30% in • Strong growth world-wide +8.6% North America supported by global • UK decreas
Slide 22: Escrow – returning to sustainable growth
Escrow – returning to sustainable growth Strategic Priorities Dynamics Actions Completed What’s next? On-premise software declining as a % of overall Largest ever on-premise Support new recruits to new software sales BUT … Escrow order (£800k) signed Maintain our market recreate effective new for a
Slide 23: Escrow – some key themes
Escrow – some key themes Return Escrow to sustainable growth by FY21 Escrow Revenue FY19 • Growth in Verification revenue overshadowed £11.5m by decline in UK Contracts revenue +2.7% • Renewal rate holding => on-premise market £26.5m still viable -5.0% • Challenging UK market • Sales team strengthen
Slide 24: EaaS – a new streamlined cloud-resilience solution
EaaS – a new streamlined cloud-resilience solution Accelerating the adoption of the EaaS proposition • Escrow as a Service (“EaaS”) is the option to either access or replicate a client’s unique cloud environment in order to minimise any downtime or disruption in the event of 3rd party software suppl
Slide 25: Summary and outlook
Summary and outlook • Robust revenue growth during first year of operational transformation Summary • Adjusted EBIT margin improved to 13.4% (2018:13.2%) with strong cash generation and net debt reduced to £20.2m (2018: £27.8m) • Assurance: continued double-digit growth and margin improvement • Escr
Slide 26: Agenda
Agenda Adam Palser Overview CEO Tim Kowalski Financial review CFO Adam Palser Business review CEO Q&A Appendix 26
Slide 27: Q&A
Q&A
Slide 28: Agenda
Agenda Adam Palser Overview CEO Tim Kowalski Financial review CFO Adam Palser Business review CEO Q&A Appendix 28
Slide 29: Appendix
Appendix
Slide 30: Our self-help programme - Securing Growth Together
Our self-help programme - Securing Growth Together • Designed to lead the market through our thought leadership, industry Lead the market content and research • Promote NCC Group as employer of choice • Designed to increase the quality and quantity of orders • Skills development: Value-selling; sale
Slide 31: Unified systems (48 to 10)
Unified systems (48 to 10) New Old 31
Slide 32: Cloud resilience – Escrow as a Service (EaaS)
Cloud resilience – Escrow as a Service (EaaS) “ As a company that promises to deliver a specialised bespoke Speed and reliability is everything to Heathrow Express customers and that Certified as a Gold partner by Microsoft service with fast goes for our digital for best-in-class capabilities in Dev
Slide 33: Financial performance - Adjusting items and ISIs
Financial performance - Adjusting items and ISIs** Cash neutral in FY19 Adjusting items are set out below: 2019 2018 £m £m Individually Significant Items 3.6 7.6 Share based payments 1.7 0.3 Amortisation of acquired intangibles 9.0 9.4 Unwinding of discounts on deferred consideration - 0.3 Profit on
Slide 34: Financial performance – balance sheet
Financial performance – balance sheet Strong financial position 2019 2018* • Intangible assets includes additions of £m £m £6.4m and amortisation of £13.4m Goodwill 189.4 187.2 Intangible assets 41.8 52.8 PPE 16.9 19.4 • PPE** includes additions of £3.1m and Investments 0.3 0.4 depreciation of £5.6m
Slide 35: Financial performance – tax and dividends
Financial performance – tax and dividends Effective tax rate reduced and dividends proposed to be maintained Tax • Effective tax rate attributable to adjusted profits and continuing operations is 20.3% (2018: 22.5%) • Fall in effective tax rate attributable mainly to the decrease in US federal tax r
Slide 36: Financial performance – adjusted EBIT bridge
Financial performance – adjusted EBIT bridge Year on year profitable growth while investing in transformation * * 2018 restated for prior year discontinued items and adjusted for the impact of IFRS 15 of £0.2m 36
Slide 37: 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