Slide 1: Half Year Results
Half Year Results Six months to 30 November 2020 4 February 2021
Slide 2: Overview
Overview Adam Palser CEO necgroup~
Slide 3: Executive Highlights
Executive Highlights1 Revenue Year–on–year Confident in £135.6m growth the future +2.2% H1 2020: £132.7m Revenue up 2.2% despite the Covid-19 Scalable global business resulting from Adjusted EBIT2 disruption transformational investment Crucially, for the future, we are seeing programme launche
Slide 4: H1 2021 summary
H1 2021 summary NCC Group has grown year-on-year 10 billion security events processed every day Year-on-year (“YoY”) increase in Group Revenue, Gross Profit and EBIT despite Covid-19 disruption • Assurance revenues up 2.4% YoY to £117.1m demonstrating the strength of our market, 95% cyber threats
Slide 5: Market
Market Macro trends are evolving as expected Two thirds of organisations will increase outsourced cyber resilience work. This rises to 70% in the private sector and falls to 58% in the public sector.2 Continued excellent long-term market growth1 prospects • Cyber Resilience is more important than
Slide 6: Confident in the future
Confident in the future Strong foundation – confident in the future Balance sheet – robust cash conversion ratio1 maintained at 100.8% and H1 2021 net cash2 of £3.0m compared to H1 2020 net debt3 of £20.8m Securing Growth Together transformation investment made in system and processes landscape
Slide 7: Financial Review
Financial Review Tim Kowalski CFO
Slide 8: Financial summary
Financial summary Revenue Gross Profit Gross Margin % £135.6m £54.4m 40.1% Demonstrates +2.2% H1 2020: £132.7m +4.6% H1 2020: £52.0m +0.9ppts H1 2020: 39.2% resilience of Adjusted EBIT 1 Adjusted EBIT Margin % Global resourcing5 our market, £17.0m 12.5% 5,055 days business model and +1.8% H1 2020: £
Slide 9: Financial performance – Group income statement
Financial performance – Group income statement NCC Group has grown year-on-year Revenue Year-on-Year revenue growth: H1 2021 H1 2020 % change £m £m • Assurance growth of 2.4% to £117.1m despite lower 135.6 132.7 2.2% rechargeable travel expenses and Covid-19 Revenue Gross Profit 54.4 52.0 4.6% • S
Slide 10: Financial performance - Assurance
Financial performance - Assurance Reaping the benefits of a global model Revenue Performance across territories • UK & APAC decreased by 1.5% as UK only revenues in H1 decreased by 3.5% to £46.2m due to broader exposure to Covid-19 • North America (“NA”) improved by 3.1% supported by increased spe
Slide 11: Financial performance - Assurance
Financial performance - Assurance Outstanding MDR recurring revenues Technical Security Consulting (“TSC”) (+0.8% YoY) growth and a resilient “diamond core Resilient performance in Covid period reaffirms business model and market proposition of TSC” Supported by strong utilisation delivered thro
Slide 12: Financial performance – Software Resilience
Financial performance – Software Resilience Return to growth Revenue Revenue increased by 0.5% YoY: Software Resilience revenue by the Group £18.5m • UK growth YoY of 1.6%; sustainable growth building on +0.5% growth of H2 2020 • NA decreased by 5.1% owing to £0.2m less Secure Discovery testing th
Slide 13: Financial performance – Software Resilience
Financial performance – Software Resilience EaaS gaining momentum Contracts Contracts revenue decreased by 2.3% albeit Cloud proposition Escrow revenue by service line: gains momentum Renewal rates improved to 89.1% 12.8 12.5 Verification Verification continuing to grow 7.1% YoY to £6m 6.0 5.6
Slide 14: Operational KPIs – Pre-Covid H1 2020 vs Covid H1 2021
Operational KPIs – Pre-Covid H1 2020 vs Covid H1 2021 Sales order profile temporarily changed by Sales Covid Group Sales Orders, slightly down YoY (2.2%): H1 2021 H1 2020 • a testament to both our sales and delivery teams on a seamless and successful transition to working remotely Group sales orde
Slide 15: Financial performance - Cash
Financial performance - Cash Strong cash generation and discipline Net cash/(debt) and cash conversion with net cash1 at £3m H1 2021 H1 2020 Cash improvement of £23.8m with net cash1 of £3m in H1 2021 vs (£m) (£m) net debt of £20.8m in H1 2020 Cash flow before working capital 26.4 24.4 Cash conv
Slide 16: Looking forward
Looking forward Adam Palser CEO
Slide 17: A global powerhouse
A global powerhouse To be the leading cyber security advisor globally. Trusted and sought after Medium term objectives for our complete people-led, technology-enabled cyber resilience For our shareholders solutions that enable our customers to thrive Double-digit revenue growth and margin improvem
Slide 18: Our vision: a complete provider of cyber resilience solutions
Our vision: a complete provider of cyber resilience solutions What it means A one-stop shop to meet customers’ demand for evidence-based cyber resilience • A complete set of cyber and software resilience services • Promoted and sold to a global market • Underpinned by data and quantification How w
Slide 19: Supporting customers across the complete cyber lifecycle
Supporting customers across the complete cyber lifecycle Current Stages of cyber Customer challenges Solutions breadth of Comments lifecycle and demands portfolio Find and understand Assess threats and Assessment & World-leading security testing capability Assess Cyber Risk Advisory vulnerabilities
Slide 20: Selective investment to build on early success
Selective investment to build on early success Current Focused c.£3m investment in Stages of cyber Customer challenges Solutions breadth of H1 successes support of medium term lifecycle and demands portfolio objectives Find and understand Assess threats and Assessment & Assess Cyber Risk Advisory vu
Slide 21: Summary and outlook
Summary and outlook Adam Palser CEO
Slide 22: Summary and outlook
Summary and outlook H2: investing Summary systematically Outlook for the future Continued excellent long-term We are using this time of market Full year trading in line with our market prospects as “compliance disruption to accelerate our expectations debt” builds with Covid-19 disruption tran
Slide 23: Q&A
| : - necgroup” Q&A
Slide 24: Appendices
| : - necgroup” Appendices | hoa
Slide 25: Income Statement
Income Statement H1 2021 H1 2020 £m £m Continuing operations Revenue 135.6 132.7 Cost of sales (81.2) (80.7) Gross profit 54.4 52.0 Administrative expenses Depreciation and amortisation (12.7) (12.5) Other administrative expenses (29.7) (29.0) Total administrative expenses (42.4) (41.5) Operating pr
Slide 26: Income Statement: Pre-IFRS 16
Income Statement: Pre-IFRS 16 H1 2021 H1 2020 Adjusted Adjusting items Statutory Adjusted Adjusting items Statutory £m £m £m £m £m £m Continuing operations Revenue 135.6 - 135.6 132.7 - 132.7 Cost of sales (81.2) - (81.2) (80.7) - (80.7) Gross profit 54.4 - 54.4 52.0 - 52.0 Depreciation and amortisa
Slide 27: Income Statement: Reconciliation to Adjusted Pre-IFRS 16
Income Statement: Reconciliation to Adjusted Pre-IFRS 16 Table below provides a reconciliation between Pre-IFRS16 income statement on both an adjusted and statutory basis Adjusting Statutory P&L Statutory P&L Adjusting Adjusted P&L Adjusted P&L Pre-IFRS 16 IFRS 16 impact items Pre IFRS 16 IFRS 16 it
Slide 28: Income Statement: Constant Currency
Income Statement: Constant Currency Group - at constant currency H1 2021 H1 2020 H1 2021 H1 2020 Variance % Assurance – revenue Variance % (H1 2021 actual rates) (£m) (£m) (£m) (£m) Revenue 135.6 133.1 1.9% UK & APAC 50.9 51.7 (1.5%) North America 43.0 41.8 2.9% Cost of Sales (81.2) (81.3) (0.1%) Eu
Slide 29: Cashflow Statement
Cashflow Statement H1 2021 H1 2020 H1 2021 H1 2020 £m £m £m £m Profit for the period 7.5 6.6 Net cash generated from operating activities 19.0 17.0 Adjustments for: Cash flows from investing activities Depreciation of property, plant and equipment 2.4 3.3 Purchase of property, plant and equipment (1
Slide 30: Balance Sheet
Balance Sheet H1 2021 H1 2020 FY 2020 £m £m £m Non-current assets Goodwill 188.7 187.0 193.1 Other intangible assets 34.9 39.8 39.2 Property, plant and equipment 12.3 14.7 13.9 Right-of-use assets 26.2 21.7 28.7 Investments 0.3 0.3 0.3 Deferred tax assets 0.4 7.2 0.5 Total non-current assets 262.8 2
Slide 31: Tax & Dividends
Tax & Dividends Tax Effective tax rate attributable to continuing operations is 29.9% (H1 2020: 26.7%) Movement in the effective tax rate increase reflects decreased comparative R&D tax credit for the Group compared to previous period Rate remains above UK standard rate (19%) reflecting origin
Slide 32: Cyber Resilience Market (Pre-Covid)
Cyber Resilience Market (Pre-Covid) f Overall Managed Services f The cybersecurity market was valued at USD 161.07 billion in 2019, and it is expected to reach USD 363.05 billion by 2025, registering a CAGR of 14.5% during 2020-2025. The trends for IoT, BYOD, AI, and machine learning in cybersecurit
Slide 33: Our Research
Our Research At the fore-front of the cyber security industry through cost-effective research. Our 2020 Annual Research Report can be found at https://research.nccgroup.com/2021/01/31/2020-annual-research-report/. Notable work in H1 2021 includes: Financial performance - FY 2020 income statement Con
Slide 34: Notations – recap from each page
Notations – recap from each page Page 3 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. Following the adoption of IFRS 16 ‘Leases’ with effect from 1 June 2019, the Group results are n
Slide 35: 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