Ncc Group Plc · LSE:NCC
Ncc — H1 2010 Earnings Presentation
26 slides from Ncc's earnings presentation, January 2010
Slide 1: NCC Group plc Interim Results for the six months ended 30 November 2009
NCC Group plc Interim Results for the six months ended 30 November 2009 NCC Group plc, Manchester Technology Centre, Oxford Road, Manchester M1 7EF www.nccgroup.com
Slide 2: Agenda
Agenda • Highlights • Growth track record • Group structure • Group financial performance • Group Escrow • Escrow UK • Escrow Europe & US • Assurance Testing • Current trading & outlook • Appendix www.nccgroup.com 1
Slide 3: Highlights - solid, consistent growth
Highlights - solid, consistent growth • Revenue up 22% to £25.4m • Group Escrow revenue up 10% to £10.8m • Escrow UK revenue up 8% • Assurance revenues up 34% to £14.6m • Adjusted operating profits up 16% to £6.3m • Group Escrow up 9% to £6.0m • Assurance Testing up 33% to £1.6m • Adjusted diluted E
Slide 4: Growth track record
Growth track record Revenue (£m) Operating profit (£m) Full year Interim Fully diluted adjusted EPS (p) Dividend (p) www.nccgroup.com 3
Slide 5: Group structure
Group structure • Two complementary divisions • Cross selling within Assurance Testing well advanced now moving to Escrow • Brands are well recognised…supported by NCC Group Ethical Security Testing Group Escrow Secure Test NGS Escrow Escrow UK Europe Escrow US Assurance Rev: £8.3m Revenue: Revenue:
Slide 6: Group revenues
Group revenues 30 November 2009 2008 % Growth % Organic £m £m Growth Revenue Escrow UK 8.5 7.8 8% 8% Escrow Europe 1.4 1.2 17% 10% Escrow US 1.0 0.8 17% 17% Group Escrow 10.8 9.9 10% 9% Ethical Security Testing 8.2 4.9 67% 8% Site Confidence 3.1 2.8 11% 11% Information Security 3.3 3.2 2% 2% & Advis
Slide 7: Group operating profits
Group operating profits 30 November 2009 2008 % Growth % Organic £m £m Growth Divisional Contribution Group Escrow 6.0 5.5 9% 7% Assurance Testing 1.6 1.2 33% 26% Head office (1.2) (1.2) 0% 0% Adjusted operating profit 6.3 5.5 16% 13% Adjusted operating profit 25% 26% - - margin www.nccgroup.com 6
Slide 8: Group financial performance
Group financial performance 30 November 2009 2008 % £m £m Change Adjusted operating profit * 6.3 5.5 16% Amortisation (0.7) (0.5) 67% Interest (0.2) (0.3) 67% Pre tax profits 5.4 4.7 16% Adjusted pre tax profits 6.2 5.2 19% Adjusted full diluted EPS (p) 13.3p 11.0p 21% Interim Dividend/share (p) 3.5
Slide 9: Group cashflow
Group cashflow 30 November 2009 2008 £m £m Cash generated from operations 7.1 5.9 Net interest paid (0.1) (0.2) Income taxes paid (1.7) (0.7) Acquisition of property, plant & equipment (1.5) (0.6) Deferred considerations on acquisitions (3.7) (10.7) Cash inflow/(outflow) before financing 0.3 (6.3) a
Slide 10: Group balance sheet
Group balance sheet • Cash conversion improved to 127% (119% in Nov 2009) of operating profits • Group £8.6m net debt (£5.6m net debt in May 2009) • Expected net debt free before the expiry of the bank term in July 2010 excluding further acquisitions • Multi option credit facility of £13m is in plac
Slide 11: Group Escrow
Group Escrow Group Escrow Revenue £10.8m Escrow UK Contribution £6.0m Revenue £8.5m Headcount 153 FTE Headcount 122 FTE Escrow Germany Revenue £0.3m Headcount 2 FTE Escrow USA Revenue £1.0m Escrow Switzerland Headcount 15 FTE Escrow Europe Revenue £0.1 Netherlands Headcount 1 FTE Revenue £1.0m Headc
Slide 12: Escrow UK
Escrow UK Revenue £8.5m 8% • Strong revenue growth - up 8% (1% in 2008) • Verifications delivery remains tough • Same levels as H1 2008 • Order book is strong at £1.7m • Contract termination rates c.12% - underlying reasons remain the same • Application is no longer used • Application is not busines
Slide 13: Escrow Europe & USA
Escrow Europe & USA Revenue - Europe £1.4m 17% €1.6m Revenue - US £1.0m 17% $1.6m • Strong revenue growth in both business segments • Total non UK renewals base worth £3.2m • Verifications sales are improving in businesses • Quality of Escrow Europe revenues are much better • US & European managemen
Slide 14: Assurance Division
Assurance Division • Information security threats are increasing - “an arms race” • Main threats remain • Organised crime • Malicious employees • Incompetence • User stupidity - social networking • Corporate espionage • Spanish government website hacked - Mr. Bean replaced photo of country’s prime m
Slide 15: Assurance Division
Assurance Division Revenue £14.6m 34% Contribution £1.6m 33% • Solid growth throughout first half of year • Recurring revenues are 71% of Divisional total revenues • Area for future acquisitions and in house research & development • Positioning of NGS nearer completion - transfer of jobs & testers t
Slide 16: Assurance Division - Ethical Security Testing
Assurance Division Ethical Security Testing £8.3m 67% Secure Test & NGS • Two very strong Global brands • Market appetite undimmed despite economic downturn - resource constrained • Largest accredited test team in Europe • 100 Team of Testers including 60 CHECK & CREST accredited • Buying Solutions
Slide 17: Assurance Division - Site Confidence
Assurance Division Site Confidence £3.1m 11% • Performance & Load Testing renewals at 82% • Cost pressures are real due to economy • Load is becoming more significant • US competitors sold for big values - 5/6 x revenues Information Security & Advisory £3.3m 2% • PCI compliance opportunities remain
Slide 18: Current trading & outlook
Current trading & outlook • Economy dominates trading outlook - green shoots are not visible • Group is well insulated from the worst of the economic climate • Strategy is more of the same - focus on core strengths & opportunities • Acquisitions are difficult but sense is appearing on pricing • Grou
Slide 19: Appendix
Appendix www.nccgroup.com 18
Slide 20: Group Escrow
Group Escrow • Cornerstone of NCC Group in profit & revenue Agreements automatically • The UK provides to 94 of FTSE 100 renew annually • World’s largest software Escrow provider • Agreements sold globally Provides service to over 26,000 parties globally • Escrow Live customer portal provides secure
Slide 21: Escrow Agreement - high value & low cost concept
Escrow Agreement - high value & low cost concept What is an Escrow Agreement? • Escrow is a legal contract between three parties • licensor (or owner) • licensee • an independent trusted third party • Holds software source code or business critical material • Provides protection from key supplier fa
Slide 22: Group Escrow – sector concentrations
Group Escrow – sector concentrations • NCC Group remains the world’s largest provider • No reliance on a single sector • Actively sell in UK, Holland, Switzerland, Germany & North America • Dominance in Europe although not in North America 4% 2% November 2009 6% Banks & Insurance 3% Software & Compu
Slide 23: Assurance Division
Assurance Division Security Testing & Information Security advisory • Uncovers security weakness by controlled In the testing & advisory market for nearly 30 years invasion of a network or web site • Forensic services specialising in technically complex computer & digital evidence NGS industry secur
Slide 24: Assurance Division
Assurance Division • Assurance Division trades under a set of recognised brands • 365 Secure – Fully accredited secure & monitored service • Secure Test – Ethical testing & managed services • NGS – Premium brand ethical testing, research & forensics • NCC Group – PCI compliance & auditing • Site Con
Slide 25: Assurance – sector concentrations
Assurance – sector concentrations • No major sector reliance 1% November 2009 2% 3% 2% 3% Software & Computer Services 24% Banks & Insurance 9% General Retailers Other Travel & Leisure 7% Central Govt Local Govt 12% Support Services 5% Fixed & Mobile Telecommunications Education 14% Healthcare Equip
Slide 26: Range of blue chip customers across key sectors
Range of blue chip customers across key sectors Finance & Professional Services Technology Retail & Leisure Health & Education Government Utilities www.nccgroup.com 25